Lord Happy
Level 5

Happy day,

Thank you in advance for any commentary you might provide. This might also be in the wrong forum, and I apologize in advance if that is the case.  This is about SSTB vs. non-SSTB activity within the same entity. 

Client provides consulting services and also runs workshops.  The consulting business certifies that a manufacturing process meetings government guidelines, and provides specific advice and solutions to any process or condition that would not meet the requirements for certification. Revenue for this activity is 1.15 million.

Client runs workshops and people pay to attend.  An unknown portion of the consulting services comes from attendees who then hire the client to consult.  Revenue for this activity is 275k.

The owner is the primary, but not the only, consultant, and is one of the teachers.  The client maintains one set of books and tracks the income for each income for each separately.  As the workshops are out of town, it is possible to identify expenses directly related to the workshops, although this has not been done.  Now that courses are offered online, this is a de minimus expense, but it could be tracked, even if it is just an expense for a commercial Zoom license and merchant account fees as consulting fees are not paid by credit card.

Based on Section 1.199A-5(c)(1)(iii)(B), I am torn as to whether or not the income can be segregated.  Are P&L by class and mixed use staff sufficient to justify a split?  The services are sold to an audience that may or may not use both services. 

Do you think that all of the income is SSTB, or do you believe that it can be allocated?  And if so, where in Proseries would such an allocation occur?

0 Cheers