Frogman
Level 3

No, this doesn't sound right. Even if the taxpayer itemizes, it would not be double dipping. It would be single dipping. The taxpayer should have the right to deduct his full charitable contribution on his Schedule A, which would be the case if QBI is not reduced by the amount of the charitable contribution. If his QBI is reduced by the charitable contribution, his benefit for making the charitable contribution is essentially reduced by 20%. If the taxpayer doesn't itemize, the situation would be even worse. In this case, the mere fact that he made a charitable contribution actually INCREASES his taxes because his QBI deduction is reduced (and thus his taxable income increased) even though he is receiving no tax benefit for the charitable contribution if he uses the standard deduction.

This is why I agree with @itonewbie about this, and also why I believe the rule of reducing QBI by the amount of charitable contributions only applies to those types of charitable contributions that are regular business expenses, like in the case of a "benefit corporation". Typical charitable contributions are not a normal business expense and just get passed through to the taxpayer. QBI should not be reduced by these types of charitable contributions by the S-corp. Read @itonewbie's and my other posts closely on this thread and the pieces will fall into place to support this conclusion.

0 Cheers