This is from a webinar with TaxSpeaker...
Special Note For S Corp SHs. The SE health insurance deduction for an S corporation
shareholder is allowed as a result of wages paid to the shareholder, not passthrough K-1 income
(IRS Notice 2008-1). S corp SHs with no wages are not allowed a SE health insurance deduction
regardless if they have K-1 passthrough income - wages from the S corp are required. Wages,
however, are specifically excluded from the definition of QBI, including wages paid to an S
corporation shareholder. While the law and regulations do not specifically address S corporation
shareholder wages, it seems clear that the SE health insurance deduction for an S corp
shareholder is NOT ATTRIBUTABLE to "gross income from the trade or business used to
calculate" QBI, and, therefore, the SE health insurance deduction for an S corp shareholder does
NOT reduce QBI.