Does the program calculate the adjustment on Self-employment tax deduction on the QBI income if all the self-employed income does not qualify?

[TaxGuyBill]

I don't know what the program does, but should NOT do that.

However, can you clarify why the self-employment income does not qualify for QBI?

[rbynaker]

The only way I can get the question to make sense is to imagine a scenario with two sources of SE income, one QBI, the other SSTB with the TI over the upper limit ($415K).  Then you'd have to allocate the self-employment tax deduction.  I think the final regs say that's done based on "gross income" for some reason but I'd have to look it up again.

[rbynaker]

Is this what we're talking about?

"For purposes of section 199A only, deductions such as the deductible portion of the tax on self-employment income under section 164(f), the self-employed health insurance deduction under section 162(l), and the deduction for contributions to qualified retirement plans under section 404 are considered attributable to a trade or business to the extent that the individual’s gross income from the trade or business is taken into account in calculating the allowable deduction, on a proportionate basis to the gross income received from the trade or business."

[George4Tacks · Accepted solution]

Lacerte does it proportionally to the SE income for each business. One with 200K and another with 100K will be reduced by 2/3 and 1/3 of the SE tax, respectively. 

Regardless of whether it is SSTB.