# Do royalties qualify for the new QBI deduction?

**URL:** https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481
**Category:** Accounting and Taxes
**Created:** [March 2, 2019, 9:53pm UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481 "2019-03-02T21:53:30Z")
**Posts on this page:** 6
**Page:** 1

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### Author: ![txhsmom](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/t/b2d939/32.png) [@txhsmom](https://www.mineralrightsforum.com/u/txhsmom)
#### Post date: [March 2, 2019, 9:53pm UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/1 "2019-03-02T21:53:30Z")

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

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### Author: ![M\_Barnes](https://www.mineralrightsforum.com/user_avatar/www.mineralrightsforum.com/m_barnes/32/10942_2.png) [@M\_Barnes](https://www.mineralrightsforum.com/u/M_Barnes)
#### Post date: [March 2, 2019, 11:00pm UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/2 "2019-03-02T23:00:04Z")

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

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### Author: ![Jennat01](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/j/7ab992/32.png) [@Jennat01](https://www.mineralrightsforum.com/u/Jennat01)
#### Post date: [March 3, 2019, 12:05am UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/3 "2019-03-03T00:05:19Z")

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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 estate 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!

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### Author: ![txhsmom](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/t/b2d939/32.png) [@txhsmom](https://www.mineralrightsforum.com/u/txhsmom)
#### Post date: [March 3, 2019, 12:45am UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/4 "2019-03-03T00:45:43Z")

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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.

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### Author: ![marrow88](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/m/ed8c4c/32.png) [@marrow88](https://www.mineralrightsforum.com/u/marrow88)
#### Post date: [March 15, 2019, 2:22am UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/5 "2019-03-15T02:22:58Z")

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

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### Author: ![MRFAdmin\_SV](https://www.mineralrightsforum.com/letter_avatar_proxy/v4/letter/m/e0b2c6/32.png) [@MRFAdmin\_SV](https://www.mineralrightsforum.com/u/MRFAdmin_SV)
#### Post date: [January 11, 2025, 7:12pm UTC](https://www.mineralrightsforum.com/t/do-royalties-qualify-for-the-new-qbi-deduction/42481/6 "2025-01-11T19:12:56Z")

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