Is a psychiatrist operating as a Sub S eligible to take a QBI deduction and where on Pro Series is that calculated?

[regina1 · Accepted solution]

I read the rules as that professional/expert services don't qualify.  But, I'm just now digging into the rules.  

https://www.opherganel.com/New-2017-Tax-Law-Impact-Your-Therapy-Practice  I would be googling specified service business and try to get some answers there.  I'd probably go directly to the tax code or call the practitioner's service to confirm.   

Q. Is a therapy practice considered a qualified trade or business?

A. This is one of those areas that will likely be subject to evolving rules from the IRS and bears watching. However, at first blush it appears that a therapy practice would not be considered a qualified business because (a) it is in the health field, and even if it wasn’t, (b) it can be described as a business where the principal asset of the business is the reputation or skill of one or more of its employees. Thus, a therapy practice will likely be deemed a specified service business (SSB).

[IRonMaN]

Folks seem to be really confused so far this year between a qualified business and an SSTB.  Hopefully the folks working at the IRS are just as confused about the new law.

[workingtoolong]

Instructions for 1120S page 38 indicate an exception for specified service trade or business if taxable income is less than certain threshold amounts.  So health care professional could qualify possibly.

[regina1]

That's good to know!  

[regina1]

From the instructions

Exceptions. If the shareholder’s
taxable income is equal to or less than the
threshold of $157,500 ($315,000 if
married filing jointly), the specified service
items are treated as a qualified trade or
business. If the shareholder’s taxable
income is between $157,501 and
$207,500 ($315,001 and $415,000 if
married filing jointly), an applicable
percentage of the specified service trade
or business is treated as a qualified trade
or business. Therefore, the Schedule K-1
issued to each shareholder must
separately identify each trade or business
and identify any specified service trade or
business.

[Just-Lisa-Now-]

You're entering the K-1 from the S-Corp into the 1040 return?  or you're preparing the 1120S return?

[workingtoolong]

Preparing both 1120S and 1040

[Just-Lisa-Now-]

I think when you enter the K-1 into the 1040 you'll have the opportunity to compute any QBI.   I haven't prepared any 1120S returns or had anyone in with an 1120S K-1 yet this year, so I cant speak from experience.