PhoebeRoberts
Level 11
Level 11

Working interests held directly (as opposed to through a liability-limiting entity) are statutorily nonpassive. Royalties are statutorily portfolio (which is also not passive income).

The royalties are clearly not QBI, because portfolio income isn't QBI. I'd sign a return taking the position that the working interests were QBI - they're enough of a ToB to give rise to SE tax, after all.

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