Questions and Scenario Inputs
Business activity (1)
Rental Real Estate
Does the activity qualify
for QBI Deduction? (2)
Does the business need
earnings for working capital?
Does the Owner need cash
Is the Business likely to
generate losses for 1+ years?
Does the Business have
Plan to sell in 5+ years
with QSBS gain exclusion? (3)
Plan to sell business with
long term capital gain?
Taxpayer Federal Marginal
Tax Rate (4)
Taxpayer filing status
Business activity income
Non-owner W2 wages of business activity
Owner's W2 wages from business activity
Unadjusted basis of property for QBI (6)
Taxpayer other taxable
Taxpayer adjustments to
Itemized deductions (if
higher than SD)
Schedule E Rental
S Corp K-1
Questionaire Score for
Owner's W2 wages from business
Net income of business
Less: Taxpayer Total
Taxable income before QBI
Less: QBI Deduction
SE Tax / Payroll Taxes on
owner's wages (8)
Federal Individual Income
Corporate Tax (21%)
Net Cash to Owner (Salary,
C Corp Cash Retained
Total Cash After Taxes
DISCLAIMER: This worksheet is one tool in the consideration process and
should not be relied upon without the advice of a professional who
understands all the facts and relevant implications. This worksheet provides
directional analysis and will not predict actual results. Additional
considerations not included in this analysis, such as State Taxes, should be
included entity selection considerations.
1. Choose Service businesses to apply the QBI Service
Limitation. A service businesses (SSTB), 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.
2. Pass thru businesses may qualify for the Qualified Business
Income (QBI) deduction. For more details, review the Tax Cuts and Jobs Act,
Provision 11011 Section 199A - Deduction for Qualified Business Income FAQs
3. If the taxpayer is planning to sell the business in the
future, consider using an entity structure that will benefit from long term
capital gains treatment, including Qualified Small Business Stock election to
exclude certain qualifying gains.
4. As the Taxpayer's Federal Marginal rate exceeds the 21% flat
corporate rate, the C Corp becomes more attractive from a tax planning
5. W-2 wages used to calculate the Sec 199A(b)(2) limits are
wages paid to the owner’s employees. Sole proprietors and partners are not
permitted to pay themselves W-2 wages. They are not considered employees in
the eyes of the IRS.
6. Enter the unadjusted basis immediately after acquisition
(UBIA) of qualified property held by the trade or business.
7. The Entity Selection Score is a qualitative analysis based on
responses to the questions, and weighting the value of each question based on
user input above. This qualitative analysis is directional only, and should
be used in conjunction with other considerations, including the worksheet
8. The worksheet calculates SE Tax on Owner Wages for Schedule
C/F and Partnership earnings, without respect to other wages that might be
paid to Taxpayer that may reduce SE Tax.
9. The worksheet uses the 2018 rate tables for the Single and
Married Filing Joint (MFJ) filing statuses.