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Is doTerra Wellness Advocate a Specified Trade of Business for Qualified Business Income Deduction?

nmms
Level 4
 
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George4Tacks
Level 15
Q5. What is a qualified trade or business?

A5. A qualified trade or business is any trade or business, with two exceptions:

  1. Specified service trade or business (SSTB), which includes a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees. This exception only applies if a taxpayer’s taxable income exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers
     
  2. Performing services as an employee

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Selling essential oils is NOT a SSTB


Here's wishing you many Happy Returns

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16 Comments 16
George4Tacks
Level 15
Q5. What is a qualified trade or business?

A5. A qualified trade or business is any trade or business, with two exceptions:

  1. Specified service trade or business (SSTB), which includes a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees. This exception only applies if a taxpayer’s taxable income exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers
     
  2. Performing services as an employee

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Selling essential oils is NOT a SSTB


Here's wishing you many Happy Returns
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IRonMaN
Level 15
Yeah, I did my intense research by way of a Google search.  Although my wife would make an argument that is a field of health since she thinks the "right" oils or combination thereof, will cure anything known to man.  As a caveat, I should mention that she received her medical degree from the Minnesota School of BS. :open_mouth::open_mouth:

Slava Ukraini!
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George4Tacks
Level 15
Notice I did not say SNAKE OIL
I am trying to be on very good behavior during my probationary period.

Here's wishing you many Happy Returns
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IRonMaN
Level 15
You are doing good!

Slava Ukraini!
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George4Tacks
Level 15
But my steaks are done well.

Here's wishing you many Happy Returns
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IRonMaN
Level 15

I would vote "no"


Slava Ukraini!
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nmms
Level 4
Why "no"?
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sjrcpa
Level 15
What is a Terra Wellness Advocate? What do they do?

Ex-AllStar
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sjrcpa
Level 15
Why do you think the answer is Yes?

Ex-AllStar
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nmms
Level 4
The last definition of Specified Service Trade or Business (SSTB) from TheTaxBook Tools for Tax Pros is:
"Any trade or business that consists of the following, or any combination thereof.
• Receiving fees, compensation, or other income for endorsing products or services,
• Licensing or receiving fees, compensation or other income for use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual’s identity, and
• Receiving fees, compensation, or other income for appearing at an event or on radio, television, or another media format."
My client earns commissions by sharing products and enrolling others in the program as wellness advocates or wholesale customers. Am I correct to conclude this client is receiving compensation for endorsing products and her business is a Specified Service Trade or Business?
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sjrcpa
Level 15
Your client is not a celebrity, is she? IRS clarified that this is basically what that language means.

Ex-AllStar
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IRonMaN
Level 15
As a side note, you do realize it is better to not be a SSTB than it is to be one due to the extra limitations on the deduction?

Slava Ukraini!
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George4Tacks
Level 15
Why muddy the water with that tidbit? Better is not a proper tax criteria. It's like using that four letter F word with taxes.

Here's wishing you many Happy Returns
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IRonMaN
Level 15
Fudg?  I think it has five letters.

Slava Ukraini!
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George4Tacks
Level 15
FAIR

Here's wishing you many Happy Returns
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qbteachmt
Level 15

"by sharing products and enrolling others in the program as wellness advocates or wholesale customers."


= MLM


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"Level Up" is a gaming function, not a real life function.
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