There are some items clarified, others are a little murky
https://www.irs.gov/newsroom/tax-cuts-a ... ction-faqs
And they are adding add'l Q&A as questions arise
Q33. Health insurance premiums paid by an S-Corporation for greater than 2% shareholders reduce qualified business income (QBI) at the entity level by reducing the ordinary income used to compute allocable QBI. If I take the self-employed health insurance deduction for these premiums on my individual tax return, do I have to also include this deduction when calculating my QBI from the S-Corporation?
A33. Generally, the self-employed health insurance deduction under section 162(l) is considered attributable to a trade or business for purposes of section 199A and will be a deduction in determining QBI. This may result in QBI being reduced at both the entity and the shareholder level.
taxguy2399 wrote:Q&A #33 is complete crap. The health insurance premiums were already deducted from the S-Corp income via wages as required under notice 2008-1. I'm not amending any returns to reduce QBI for this scenario at this time.
taxguy2399 wrote:Q&A #33 is complete crap.
Jeff-Ohio wrote:Chay wrote:For a PTE the trade or business has already received the SE Health deduction at the entity level in exchange for increasing a partner or shareholder's income at the individual level.
(Unrelated to health insurance, the PTE also received a normal wage deduction in exchange [if we are to use that term] for increasing a shareholder’s income at the individual level. And that wage income is not QBI at the 1040 level).
I get it that it would be duplication if we reduced QBI inside of the S and then again on the guy’s 1040 for what amounts to the same amount/deduction.
Some might argue, though, that the health insurance is just additional wages, deductible by the S as such, just like normal wages, and includible as wage income on the 1040, just like normal wages. And normal wages don’t represent QBI income. Then they’d point to the final reg which just says to reduce QBI by the SE Health Deduction, with no differentiation between a 2% S shareholder and a sole-proprietor.
Wiles wrote:Some might argue, though, that the health insurance is just additional wages, deductible by the S as such, just like normal wages, and includible as wage income on the 1040, just like normal wages.
To expand on (or restate) this - for an S, at least - the IRS has the reasonable comp argument on their side. As we know, QBI is reduced by reasonable compensation paid to the S shareholder. The IRS can ignore that the origin of this increase to wages is from that SEHI paid by the S. They may just say that whole amount reported on the W-2 represents reasonable comp.
For purposes of section 199A only, deductions such as the deductible portion of the tax on self-employment income under section 164(f), the self-employed health insurance deduction under section 162(l), and the deduction for contributions to qualified retirement plans under section 404 are considered attributable to a trade or business to the extent that the individual's gross income from the trade or business is taken into account in calculating the allowable deduction, on a proportionate basis to the gross income received from the trade or business.
Users browsing this forum: Google [Bot], Google Adsense [Bot], Joanmcq, keninmichigan, SlipperyPencil, UnlicensedTaxPro, wale89, Wiles and 110 guests