QBI Entity Selection Calculator

This worksheet is designed for Tax Professionals to evaluate the type of legal entity a business should consider, including the application of the Qualified Business Income (QBI) deduction. The best tax strategies may include a combination of business entities to optimize the tax results for the taxpayer.

QBI Entity Selection Calculator
Help and FAQs
Inputs
QBI Entity Selection Calculator
 Questions / Inputs for Scenario Planning   Response 
Qualifying Business Income Deduction (IRC Section 199A)  
Is the business a Sec 162 qualifying activity for the QBI Deduction?
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 by IRS: https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-deduction-for-qualified-business-income-faqs
Is the activity an SSTB (Specified Service Trade or Business)?
Choose 'Yes' 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.
Business activity income before wages
Enter business activity income for the entity. Do not include wage amounts.
   Non-owner W2 wages from business activity
Enter the W-2 wages paid to non-owners of the business activity. W-2 wages may be used to calculate the Sec 199A(b)(2) limitations.
   Taxpayer W2 wages from business activity 
Enter the W-2 wages paid to S-Corp or C Corp owners of the business activity. W-2 wages may be used to calculate the Sec 199A(b)(2) limitations.
   Taxpayer guaranteed payments from business activity 
Enter guaranteed payments. Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only. For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income. Guaranteed payments are not subject to income tax withholding. Source: https://taxmap.irs.gov/taxmap/pubs/p541-005.htm
   Unadjusted basis of property for QBI 
Enter the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business.
Qualified REIT and PTP dividends
Enter the net sum of qualified Real Estate Investment Trust and Publically Traded Partnership dividends. Eligible taxpayers may also be entitled to a deduction of up to 20 percent of their combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. This component of the section 199A deduction is not limited by W-2 wages or the UBIA of qualified property. Source: https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-income-deduction-faqs
   
Other Taxpayer Information  
Taxpayer filing status
The worksheet uses the 2018 rate tables for the Single and Married Filing Joint (MFJ) filing statuses.
Taxpayer other taxable income
Enter additional items of taxable income, such as spouse wages, interest, or taxable pensions. This amount is needed to estimate taxable income for purposes of the QBI deduction calculation.
Taxpayer adjustments to income:   
  Self-employed SEP, SIMPLE, qual. Plans
As indicated, enter combined amounts for Self-Employed SEP and SIMPLE and relevant qualified plans.
  Self-employed health insurance deduction
Enter health insurance deduction amount related to self-employment.
  Other adjustments to income (not 1/2 SE tax)
This field is provided for adjustments other than the one half of Self-employment tax per guidance from the IRS pub 535.
Itemized deductions, if higher than Standard Deduction
Enter the itemized deduction amount if applicable. For example, if the itemized deduction amount is 30,000 and the standard deduction is 24,000, enter 30,000.

   
   
   
Entity Selection
 Line   QBI Entity Selection Calculator   
1  
Non-owner W2 wages  
Taxpayer W2 wages $0 $0 $0  
Guaranteed payments $0 $0 $0 $0  
Net income from business activity for QBI deduction  
Federal Individual Tax Return Summary            
W2 wages / Guaranteed payments   $0 $0  
Qualified REIT and PTP dividends  
 
Less: Adjustments to income  
Less: Standard or itemized deductions   
Taxable income before QBI   
Less: QBI Deduction  
Taxable Income  
SE Tax / Payroll Taxes on owner's wages   
Federal Individual Income Tax  
Corporate Tax (21%)  NA   NA   NA   NA   
Total Taxes   
  Net Cash to Owner (Salary, K-1, -Taxes)  
  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 evaluated for entity selection considerations.  
Calculations
 Line   Complex QBI Worksheets from IRS 
A 0
B Adjustments for 1/2 SE tax, SE health insurance, SE pension 0 0 0
C   Adjusted net income from business activity for QBI deduction 0
             
  Taxable income before QBI Deduction
  Is the business a Sec 162 qualifying activity for QBI Deduction? No
  Does Service Business Limitation Apply?
   Schedule A - Specified Service Trades or Businesses (SSTB)           
2 Qualified business income from the trade or business
Allocable share of W2 wages from the trade or business
Allocable share of the UBIA
Threshold. Enter $157,500 ($315,000 if MFJ)
Subtract line 6 from 5
Phase-in range. Enter $50,000 ($100,000 if MFJ)
Divide line 7 by 8
Applicable percentage. Subtract 9 from 100%
Applicable percentage of QBI. Multiply line 2 by line 10. Enter this amount on Schedule C or Part II, line 2 for the corresponding business.
Applicable percentage of W2 wages. Multiply line 3 by 10. Enter on Part II, line 4 for the corresponding business.
Applicable percentage of UBIA. Multiply line 4 by line 10. Enter this amount on Part II, line 7 for the corresponding business. 
             
  Does Wage Limit Apply?
   Part II: Determine Your Qualified Business Income Component           
2 Net income from business activity for QBI deduction (or from A, Line 11)
Multiply Line 2 by 20%.  If taxable income is < $157,500 (or < $315MFJ), skip 4 thru 12, enter on 13.
Allocable share of W2 wages from business  (or from A, Line 12)
Multiply Line 4 by 50%
Multiply Line 4 by 25%
Allocable share of UBIA  (or from A, Line 13)
Multiply Line 7 by 2.5%
Add Lines 6 and 8
Enter the greater of 5 or 9
W2 wage and UBIA limitation. Enter the smaller of line 3 or 10
Phased in reduction. Enter amount from Part III, line 26, if any.
QBI before patron reduction. Enter greater of line 11 or 12.
Patron reduction. Enter the amount from Sch D, line 6, if any. 0 0 0 0 0
Qualified business income component. Subtract 14 from 13
Total QBI component. Add all amounts on line 15.
   Part III: Phased-in Reduction           
Enter amounts from line 3.
Enter the amount from line 10
Subtract line 18 from 17
Taxable income before QBI Deduction
Threshold. Enter $157,500 ($315,000 if MFJ)
Subract line 21 from 20
Phase-in range. Enter $50,000 ($100,000 if MFJ)
Phase-in percentage. Divide line 22 by 23
Total phase-in reduction. Multiply line 19 by 24
QBI after phase-in reduction. Subtract line 25 from 17. Enter on line 12
   Part IV: Determine Your QBI Deduction           
Total QBI component. Enter amount from Part II, line 16.
Qualified REIT and PTP dividends
Qualified REIT and PTP loss carryforward. Enter as negative 0 0 0 0 0
Total qualified REIT and PTP income. Add lines 28 and 29.
REIT and PTP component. Multiply line 30 by 20%.
QBI deduction before the income limitation. Add lines 27 and 31.
Taxable income before QBI Deduction
Net capital gain. 0 0 0 0 0
Subtract lie 34 from 33. If zero or less, enter 0
Income limitation. Multiply line 35 by 20%.
QBI deduction. Enter the smaller of line 32 or 36.
Total qualified REIT and PTP loss carryforward. Add lines 28 and 29, if zero or greater, enter 0 0 0 0 0 0
DPAD. 0 0 0 0 0
             
             
 Line   Taxes to Populate Entity Selection 
 
  Single: Federal Tax
  MFJ: Federal Tax
             
   Social Security Wage Base - 2018           
1 Sch C/F/Pship Net / W2 Wages Taxes 0
PR Tax / SE Tax
Adjustment to income for half of SE Tax 0 0
Add: Self-employed health insurance & pension 0 0 0
Add: Other adjustments to Income
Total Adjustments to Income
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