Qualified Business Income Deduction

Available for business owner who meet certain income criteria. Section 199A of the IRC, provides many owners of sole proprietor, S Corp and some Estates and trust a deduction of income from a qualified trade or business. QBID is a deduction of qualified income from a trade or business.

QBI is the net amount of qualified items, to qualify, items must be:

• included in taxable income

• effectively connected to U.S trade or business

Qualified items include income Gain/loss.

Unqualified Income

• capital gain

• certain dividends

• interest income

• W2 income(amount received as reasonable compensation from an s corp)

• Guarantee payment from partnership

• payment received by a partner for service under section 707(a)

Under QBID, a qualified business or trade can take a deduction of a percentage of qualified income, i.e., income, gains and deduction/loss.