Course: Income Tax Planning
Lesson 9: Tax Implications of Business Structures

Student Question:

I’m having a hard time understanding the Qualified Business Income (QBI) deduction for Specific Service Trade or Business (SSTB). A nonqualified business is an SSTB, right? But SSTB businesses can qualify if they are under AGI income phase-out?

Does that mean if I am financial advisor and file Schedule C with net income onto my 1040, and file married jointly, I can take a 20% QBI if income is below 326,000?

Thanks.

Brian


Instructor Response:

Great question Brian!  

  • Flow-through entities such as sole proprietorships, partnerships, Sub-S corporations and LLCs choosing a flow-through form are generally “qualified” for the QBI deduction.
  • By exception, SSTBs are generally disqualified for the QBI deduction.
  • However, as exception to the exception, owners of an SSTB with taxable income below certain thresholds may take a QBI deduction.

Does this fully address your question?
 
Onward and Upward,

Bruce