Had 3 different SE clients come in telling me they need to become an LLC in order to take advantage of the 2018 tax reform QBI deduction

[Just-Lisa-Now-]

Everything I'm reading says this is not the case, sole props are considered pass-thru also and are eligible for this just like LLCs.

Am I misunderstanding how it works?

I'm sure CA would love it if all these new LLCs got formed, more $$$ for them!

[TaxGuyBill · Accepted solution]

I think the Franchise Board is telling that to them. 

You are correct, no LLC is needed.

[Just-Lisa-Now-]

All of them in these past few days....wondering if some media outlet is passing out incorrect information recently.

[IRonMaN]

They must all be using the same barber

[Just-Lisa-Now-]

.

[poolcleaner]

Or hairdresser(who has an O-I-H).

[sjrcpa]

.

[TaxGuyBill]

LOL.  

[itonewbie]

@IRonMaN You meant hairstylist

[itonewbie]

What I'm waiting for still is guidance on how this may or may not apply to Schedule E rentals that do not rise to the level of §162 trade or business, similar to the regs promulgated for §1411. There're some who came out early on to proclaim it will but I think it may be a bit presumptuous at this point.

[IRonMaN]

By the way, nice pic.

[sjrcpa]

.

[itonewbie]

"By the way, nice pic."

Got to live up to the name

[abctax55]

Maybe there's a new ambulance chaser, er, attorney just opened up near by?

[abctax55]

"crap...I thought this was in the lounge.  Apologies to all my attorney friends who post here."

[George4Tacks]

I am posting one of the pages from this free webinar. It is now available without credit, but watch for others that will give CPE https://www.cpaacademy.org/archived_show/a0D4400000UpQSEEA3 

This is a wonder real short version of how the QBI is done. 

A friend just did a return for one of those wonderful house flippers that formed a CA LLC. Gross sales price 1.4 mill created an LLC "fee" of $6,800. I don't think the attorney warned them of this aspect. 

[itonewbie]

Thanks for sharing, @George4Tacks!