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Specified service trade or business (SSTB) excluded from your qualified trades or businesses. Specified service trades or businesses generally are excluded from the definition of a qualified trade or business income if the taxpayer's taxable income exceeds the threshold. Therefore, no Qualified Business Income (QBI), W-2 wages, or unadjusted basis immediately after acquisition (UBIA) of the qualified property from the specified trade or business are taken into account in figuring your QBI deduction. If the specified service trade or business is conducted by your pass-through entity, the same limitation applies to the pass-through items regardless of whether you are a passive owner or materially participate in the business.
- Exception 1: If your taxable income before the QBI deduction isn’t more than $157,500 ($315,000 if married filing jointly), your specified service trade or business is a qualified trade or business, and thus may generate income eligible for the QBI deduction.
- Exception 2: If your taxable income before the QBI deduction is more than $157,500 but not $207,500 ($315,000 and $415,000 if married filing jointly), an applicable percentage of your specified service trade or business is treated as a qualified trade or business. For more information on the applicable percentage and this exception, see the instructions for Schedule A in this publication.
Specified service trade or business is any trade or business providing services in the fields of:
- Health, including physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists, and other similar healthcare professionals;
- Law, including lawyers, paralegals, legal arbitrators, mediators, and similar professionals;
- Accounting, including accountants, enrolled agents, return preparers, financial auditors, and similar professionals;
- Actuarial science, including actuaries, and similar professionals;
- Performing arts, including actors, directors, singers, musicians, entertainers, and similar artists;
- Consulting, including providing advice and counsel with the intention of influencing decisions made by a government or governmental agency and all attempts to influence legislators and other government officials on behalf of a client by lobbyists, and other similar professionals;
- Athletics, including athletes, coaches, and team managers in sports such as baseball, basketball, football, soccer, hockey, martial arts, boxing, bowling, tennis, golf, skiing, snowboarding, track and field, billiards, racing, and other athletic performance;
- Financial services, including managing wealth, advising clients with respect to finances, developing retirement plans, developing wealth transition plans, the provision of advisory and other similar services regarding valuations, mergers, acquisitions, dispositions, restructuring (including in title 11 or similar cases), and raising financial capital by underwriting, or acting as a client’s agent in the issuance of securities, and similar services;
- Brokerage services, including arranging transactions between a buyer and a seller with respect to securities (as defined in section 475(c)(2)) for a commission or fee. This includes services provided by stock brokers and other similar professionals, but does not include services provided by real estate agents and brokers, or insurance agents and brokers;
- Investing and investment management, where a fee is received for providing investing, asset management, or investment management services, including providing advice with respect to buying and selling investments;
- Trading, including the trade or business of trading in securities (as defined in section 475(c)(2)), commodities (as defined in section 475(e)(2)), or partnership interests;
- Dealing in securities, including dealing in securities (as defined in section 475(c)(2)), commodities (as defined in section 475(e)(2)), or partnership interests; or
- Any trade or business where the principal asset is the reputation or skill of one or more of its employees or owner, including:
- Receiving fees, compensation, or other income for endorsing products or services;
- Licensing or receiving fees, compensation or other income for the use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual's identity; or
- Receiving fees, compensation, or other income for appearing at an event or on radio, television, or another media format.
For more information, please see IRS Tax Cuts and Jobs Act, Provision 11011 Section 199A - Qualified Business Income Deduction FAQs
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- Marking Schedule K-1 if Entity is Specified Service Trade or Business (SSTB)