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SSTB

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Level 3

Would a self-employed taxpayer filing Schedule C that provides a dental billing service be considered a SSTB?  Does the issue apply if taxable income is below the threshhold?

Also, if the business has a loss after deducting home office expenses would there be any carryover?

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Employee
Employee

Per the final regs (https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf), "payment processing" is not considered a specified service even if provided for medical professionals such as dentists. (See 1.199A-5(b)(2)(ii) "meaning of services performed in the field of health")

Unless there is more to this business than dental billing services, it would not by itself be treated as an SSTB. Of course, if there's co-ownership with a dental office it provides billing services to, then it may be treated as an SSTB under the special rules for services provided to an SSTB under 1.199A-5(c)(2).

If taxable income is below the threshold, however, all of this is moot as the SSTB classification rules do not apply.

Any business loss from QBI activity carries forward and will reduce QBI income in future years. 

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Employee
Employee

Per the final regs (https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf), "payment processing" is not considered a specified service even if provided for medical professionals such as dentists. (See 1.199A-5(b)(2)(ii) "meaning of services performed in the field of health")

Unless there is more to this business than dental billing services, it would not by itself be treated as an SSTB. Of course, if there's co-ownership with a dental office it provides billing services to, then it may be treated as an SSTB under the special rules for services provided to an SSTB under 1.199A-5(c)(2).

If taxable income is below the threshold, however, all of this is moot as the SSTB classification rules do not apply.

Any business loss from QBI activity carries forward and will reduce QBI income in future years. 

View solution in original post

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Level 2

If the taxpayer's taxable income is below the threshhold it does not matter if their income is from as SSTB or not.