So I haven't read the entire proposed regulation but, I think I see the language that prompted question 10, part III, form W-2 worksheet:

1. Qualified Tips

D. Other Requirements

Section 224(d)(2) provides that the term “qualified tips” does not include amounts received by an individual unless such other requirements as may be established by the Secretary in regulations or other guidance are satisfied. The proposed regulations would provide that amounts received for services the performance of which is a felony or misdemeanor under applicable law are not qualified tips. In addition, the proposed regulations would provide that amounts received for prostitution services and pornographic activity are not qualified tips. Finally, to prevent reclassification of income as qualified tips, and to prevent abuse of the deduction, the proposed regulations would also provide that a payment is not a qualified tip if the tip recipient has an ownership interest in or is employed by the payor of the tip.

Sub-question on form W-2 worksheet, Part III, question 10; "I own or have ownership interest in this company"

I read that to mean "do you have ownership interest in the company that issued the W-2" 

I believe it should read "I own or have partial ownership of the payor of the tip"

Here's the facts: beautician, sloe shareholder of an S Corporation that she works for and receives tip income from her customers that are then reported on her W-2.

I will be taking the deduction based on what I understand so far!