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You're not going to find any answers in the Code. You'll find some in the proposed Regulations issued by Treasury in September.
S Corporation isn't what matters. SSTB is what matters. Here is one explanation:
In addition, people involved in entertainment, such as singers, musicians, comedians and dancers, are listed among the occupations that have customarily received tips. This may lead to some confusion, however, because specified service businesses, including businesses in the fields of law, accounting, health investment management, sports, and the performing arts, are excluded from the list. An example in the proposed regulation states that tips received by a comedian performing at an entertainment venue are not eligible for the NTOT Deduction because the comedian is engaged in the business of the performing arts, a specified service business.
Under the proposed regulation, this carve-out of specified service businesses not eligible for the NTOT Deduction is determined at the business level, not the worker level. The regulation cites, as an example, a musician who is employed by a hotel who plays the piano in the hotel’s lobby and receives tips. According to the example, the tips received by the musician are qualified tips because the musician is providing a performing arts service as an employee of the hotel, which is not a specified service business excluded from NTOT Deduction treatment. Meanwhile, bartenders and waiters employed by music venues and theaters would not be eligible for the NTOT Deduction because these businesses are involved in the performing arts field.
The proposed regulation does, however, provide that contract foodservice operator employees are eligible for the NTOT deduction. The regulation gives an example of a bartender who is employed by a food service company that provides food and beverage services for a theater. The example concludes that the tips received by the bartender are eligible for the NTOT Deduction because his employer, the food and beverage services company, is engaged in food and beverage services, which is not a specified service business excluded from the NTOT Deduction.
https://www.gtlaw.com/en/insights/2025/10/treasury-releases-no-tax-on-tips-proposed-regulation
