Updated: Mar 3
QBI includes items of:
And loss from any trades or businesses (or aggregated trade or business) that are effectively connected with the conduct of a trade or business within the United States.
This includes income from:
Partnerships (other than PTPs)
Sole proprietorships, and
Certain trusts that are included or allowed in determining taxable income for the year.
Additionally, also included are other deductions attributable to the trade or business such as:
Deductible tax on self-employment income
Self-employed health insurance
Contributions to qualified retirement plans
Keep in mind, the above list of other deductions may not be all-inclusive.
QBI doesn’t include any losses or deductions disallowed under the following losses or limitations:
The above-listed limitations are not included or allowed when determining taxable income for the year. However, these losses and deductions are considered in the tax year they are included in determining taxable income. Items of loss and deduction generated prior to 2019, that are included in income during the year, are not included in QBI.
QBI doesn’t include any of the following.
Short or long-term capital gains and losses
Dividend income, income equivalent to a dividend, or payment in lieu of dividends
Interest income not related to a trade or business
Net gain from foreign currency and commodity transactions
Income that isn’t effectively connected with the conduct of business within the U.S.
Income from notional principal contracts
Qualified REIT dividends
Qualified PTP income
Annuity income unrelated to a trade or business
Reasonable compensation paid to the taxpayer by the qualified trade or business
Guaranteed payments to a partner or payments to a partner for services under IRC §707(a) and 707(c)