What is Qualified Business Income (QBI) that entitles a taxpayer to potentially deduct 20% of trade or business profit under the new Section 199A deduction? These are the certain, slam-dunk solid QBI producers:
- Sole proprietorships filed on Schedule C
- Farming operations filed on Schedule F (including CRP payments)
- Pass-through trade or business QBI from partnerships and S-corporations on Schedule K-1
- Certain qualified REIT dividends and pass-through QBI from Publicly Traded Partnerships
- Self-dealing net rental income associated with the above reported on Schedule E
Other items may qualify, but the authority is more tenuous.
- CRP payments to non-farmers not reported on Schedule F (likely)
- Crop share landlord income reported on Form 4835 (probably)
- Pass-through rental QBI from partnerships and S-corps on Schedule K-1 (determined at the entity level, then the individual level)
- Cash rent farm landlord with more than mere investor participation (it depends who you ask)
Trade or business income which does not qualify as QBI:
- Wages from my S-Corp, or guaranteed payments from my partnership
- My W-2 wages
Temporary regulations are filtering out, but it will be years before final regulations and the subsequent litigation answers all of our questions.