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Negative Qualified Business Income

Article ID: 398
Last updated: 24 Nov, 2018
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By Jason Watson ()
Posted November 23, 2018

If you have qualified business income that would normally enjoy a Section 199A deduction, and that income is negative, it must be netted against other income. This is another cops and robbers anti-abuse provision since it would be very easy to split an entity into two, drive income way up in one, grab your Section 199A deduction, and then net the incomes together to reduce taxable income from the businesses. A double dip of sorts. Yes, you would need other income sources to ensure the taxable income Section 199A limit on the tax return is not triggered to play out this game, but the IRS eliminated the temptation. Good idea, right?

There are some specific rules on how this works, but you get the general concern.

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