The Tax Cuts and Jobs Act (TCJA), enacted in 2017, included a new deduction for qualified business income from relevant passthrough entities (RPEs) and sole proprietorships. The deduction, which is under Sec. 199A, allows individuals (as well as some trusts and estates) to deduct up to 20% of QBI. According to the Tax Advisor, businesses and trades that qualify for this deduction is “any trade or business that is not a specified service trade or business (SSTB) or the trade or business of performing services as an employee (Sec. 199A(d)(1)).” However, no income from an SSTB (trades or business that provide services in health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investment management, trading, dealing in securities, partnership interests or commodities – and a trade or business the principal asset of which is the reputation or skill of one or more of its employees) is eligible for the deduction unless an individual’s taxable income is under a certain threshold.
Abdoo et al., Determining what is a separate trade or business for Sec. 199A purposes, The Tax Advisor (July 1, 2019)
