My client has taxable income of $550,000. The $550K consists of a $50K W-2 and also a Sched K-1.

On the Sched K-1, there is $130,000 of ordinary income and $370K or guaranteed payments. So it's a pretty simple scenario.

I thought when taxable income exceeds the $421K phase out limit, you cannot deduct QBI.

Am I supposed to exclude the $370K guaranteed payments from the $421K phase out limit (effectively lowering that higher end of the phase out range)?