Question

The tax law specifically excludes 'specified service trade or business' (SSTB) from taking this deduction. SSTB is any trade or business involving the performance of services in fields of health, law, consulting, athletics, financial services, or where the principal business is the reputation or skill of one or more of its employees/owners. *Architecture and engineering services (their services build things) are specifically excluded from the definition of SSTB. What is the deduction that SSTB is excluded from?

1) Standard deduction
2) Itemized deduction
3) Qualified business income deduction
4) Capital gains deduction

Answer 1

The deduction that SSTB is excluded from is the Qualified Business Income Deduction.

Step-by-step explanation:

The deduction that SSTB is excluded from is the Qualified Business Income Deduction. The Qualified Business Income Deduction (QBI) is a tax deduction for pass-through entities, such as partnerships, S corporations, and sole proprietorships. It allows eligible businesses to deduct up to 20% of their qualified business income from their taxable income.

However, the tax law specifically excludes specified service trade or business (SSTB) from taking this deduction. SSTBs include fields such as health, law, consulting, athletics, financial services, or where the principal business is the reputation or skill of one or more of its employees/owners. Architecture and engineering services are the exceptions to this exclusion.