Gail in Virginia

It is an either or situation. The deduction is the smaller of 20% of QBI or 20% of taxable income as adjusted (in the simplest! form - assuming under the phaseout range.) That's why I am not telling anyone they will get 20% of their business income as a deduction. Like everything else in tax law, IT DEPENDS!

The other way to look at this, though, is if they only have SE income, then the taxable income would be after the SEHI deduction, and the SEP (or whatever) deduction, and the 1/2 SE tax deduction AND the standard deduction. So in your example, if they had NO OTHER INCOME, the actual QBI they would wind up with assuming they are single would be $14,070 (100,000-10,000-7,650-12,000=70,350 x 20%). There are so many variables in this mess, and I am still learning how they all come together. By 2025 I should have it down pat.

My mistake, Terry. I mis-read your scenario that the guaranteed payments were what caused the income to go into negative numbers. Since guaranteed payments are disregarded the negative total income would be irrelevant and get you back to the total income for QBI. I am not sure without looking what effect, if any, having negative income on the partnership that isn't caused by guaranteed payments would have. I was calculating guaranteed payments by taking 41187 plus the loss of 1678 and dividing it by 2 to get the guaranteed payments. My main point was to be careful about telling people they will get 20% of their QBI for a deduction, because after all the gyrations and the standard deduction it might be less - even a lot less.

Statement 7 in your scenario shows them getting QBID on the amount eligible from the partnership. However, it is my understanding that the deduction is also limited to the amount of taxable income, such that other factors may come into play. In other words if one partner is married and his wife earns more that the standard deduction so that their taxable income is greater than the partnership income, your calculation might be correct assuming no capital gains, or losses or other QBI. But the other partner could be single, with this as his only source of income. That partner would have $21432.50 in guaranteed payments, minus half the partnership loss of 839 for gross income of $20593.00. If the Guaranteed Payments are subject to SE tax, half of that would be subtracted from his income (1514) to get an AGI of 19079. After the standard deduction of $12,000 for single tp, his taxable income would be $7079. So his QBID would be limited to 20% of 7079, or $1416. Not the $3950 you calculated. So 50/50 partners can wind up with different amounts of QBID on the same income depending on all the facts and circuses. At least that is my limited understanding at this point in time. Ask me again tomorrow and I might have a different answer.

If I read the notice about the safe harbor right, the 250 hours are not necessarily provided by the partners and not necessarily documented by a log. Part of the time counted towards this could be by contractors, and the time shown on the invoice they send you could be counted towards the 250 hours based on that invoice. Did anyone else read it that way? I am just getting tired of the service requiring separate signature statements for everything - I thought when the taxpayer signed the tax return it was under penalty of perjury and applied to everything on the return.

It is my understanding from someone who spoke to the office of the counsel about the technical corrections that their position is that Section 162 has been around a long time, and there are plenty of court cases clarifying the law, so there was no need for clarification from the IRS. HA!

Just curious, though. Do the ones that don't have to come in because they are non-essential get paid their normal rate, and the ones that do have to come to work because they are "essential" get paid their normal rate? So in other words, not working pays the same as working in this case?

This is what I use as a confidentiality agreement (I copied it from one of my customers who used this). I don't require a non-compete because I have not had good experiences with them in the past. (Formatting and spacing changed when i copied it into this space, but you should get the idea of what I am using.) I make no representation of the enforce-ability of this document or its legality. Confidentiality Agreement As a member of XXXXXXXXXXXXX’s team, there may be times when you have access to client information and records, along with other information and documentation which should not be made available to the public or any other persons or entities. By signing this agreement, you agree not to disclose or divulge any information whatsoever regarding the clients of XXXXXXXXXXXXX or any other information and documentation regarding the corporation, its staff or its clients. This also pertains to any information about the day-to-day business activities of XXXXXXXXXXXXXXXXXXXXXXX. By signing this agreement, you acknowledge that breach of this confidentiality agreement will give rise to legal proceedings instituted by XXXXXXXXXXXXXXXXXXXXXXXXXX against you for damages and/or injunctive relief. This document shall not constitute a promise or guarantee of future employment. This document remains valid and in effect following the termination of employment. Signed: ________________________________ Date: ___________ Witness: ________________________________Date: ___________ Confidentiality Agreement/Rev. 9-19-06/TY

So do we attach an 8275 to every return with rental property because there is not definition under 162 of trade or business? Whichever way we classify them may be wrong in the end when this is finally clarified (if it ever is).

I am still waiting for the state of Virginia to decide how they are going to handle the federal changes and whether it will affect the tax returns for 2018. So even if we can file federal by the end of January, I doubt we will be able to file state returns.

We don't use an RDS, but we do have all of the data resident on a server, and use work stations for the program. 3 of the 4 workstations installed without a hitch. The 4th, which is the newest workstation, will not install. We are waiting for a call back from upper level support to my IT person. Hold times have been outrageous to get any help at all, and we are almost at the 24 hour mark for the call back. I left ATX for taxes after 2012, and now that they have changed the payroll reporting software, this looks like my last year with them at all. Do they not test their programs before release? I could understand with last minute tax changes how testing might be difficult, but printing and filing W2S and 1099s? Really?

I bought stock in a paper company.

Trying to get them ready but I don't like to send them too early. I want them to get there before they get all their paperwork and have a chance to lose it, but not early enough that they put the organizer away never to be found. It is a guessing game.

Just be sure you ask the questions regarding length of residence and ownership, etc. Then what cbslee said.

Happy New Year to everyone - and I hope we all have a smooth tax season! Good Luck to all!