Is this client an SSTB for QBI

I have an interior designer making in excess of the phase out amounts for QBI. Will she be considered to be an SSTB?

The following except from the preamble to the proposed regulations may help (page 60):

Additionally, the Treasury Department and the IRS are aware of the concern noted by commenters that in certain kinds of sales transactions it is common for businesses to provide consulting services in connection with the purchase of goods by customers. For example, a company that sells computers may provide customers with consulting services relating to the setup, operation, and repair of the computers, or a contractor who remodels homes may provide consulting prior to remodeling a kitchen. As described previously in this Explanation of Provisions, proposed §1.199A-5(c) provides a de minimis rule, under which a trade or business is not an SSTB if less than 10 percent of the gross receipts (5 percent if the gross receipts are greater than $25 million) of the trade or business are attributable to the performance of services in a specified service activity. However, this de minimis rule may not provide sufficient relief for certain trades or business that provide ancillary consulting services. The Treasury Department and the IRS believe that if a trade or business involves the selling or manufacturing of goods, and such trade or business provides ancillary consulting services that are not separately purchased or billed, then such trades or businesses are not in a trade or business in the field of consulting. Accordingly, proposed §1.199A-5(b)(2)(vii) provides that the field of consulting does not include consulting that is embedded in, or ancillary to, the sale of goods if there is no separate payment for the consulting services.

We recently worked with an interior designer. We paid her for her services: the time that she spent on our project, pulling together a design concept, choosing everything. She ordered furniture etc for us, billed directly to our credit card. I'd guess that she receives a commission from the stores, but there is no upcharge in her bill - she bills for time. In that case, I'd think that she is a consultant and a SSTB. Maybe the classification for an interior designer depends upon how she bills, and maybe that is a planning opportunity.

As of today, we have almost 2.5 million in revenue, 2 million is from the sales of items, half a million from "Time Billing" which is her consulting time. There's another part of the proposed regs that might allow her to not be considered an SSTB (page 65), but over all she fits the definition as a trade or business where the principal asset is the reputation or skill of its owner. In the end it looks like it might not matter since their income is going to exceed $415,000.