Do royalties qualify for the new QBI deduction?


#1

Any thoughts here? My instinct says that royalties are just not a trade or business - but Section 199A doesn’t exclude royalty income.


#2

Royalties are passive income according to my accountant. Better ask yours.


#3

Your thoughts are correct. Passive activities are not a trade or business. My opinion would need to have an operating interest to qualify. However, some passive real state activities could qualify. Final Regs have not been issued though. Petition the congressmen on ways and means and ask for inclusion in future. Good luck though !


#4

That is certainly my gut reaction - not a trade or business for purposes of this deduction. Working interests I think probably qualify.

I certainly wish the IRS had issued some guidance on this - as the statutory definition to the unversed seems to indicate royalties would qualify.


#5

I agree with the others - royalty interest do not qualify. The income has to be from a trade or business to qualify.