topic Re: thank you! in Get your taxes done using TurboTax

Do portfolio management and incentive fees qualify for 20% QBI deduction?

leapmach — Tue, 04 Jun 2019 22:29:02 GMT

hi i am a portfolio manager who executes futures trades in my discretion for my clients' managed accounts under a single member LLC structure. The LLC's income derives from collecting monthly management fees and quarterly performance fees. Does this qualify for Qualified Business Income that would allow me to take the 20% deduction? thanks!

Specified service trade or business (SSTB) includes a tra...

CynthiaR — Tue, 04 Jun 2019 22:29:03 GMT

Specified service trade or business (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.

To answer your question yes you qualify for the QBI.

thank you!

leapmach — Tue, 04 Jun 2019 22:29:05 GMT

thank you!

Re: thank you!

bgreenb — Wed, 18 Sep 2019 16:10:21 GMT

Can the clients of the manager claim any sort of deduction for the fees paid in this type of scenario? Say if the account being managed is in a single-member LLC managed by one of the clients?

Otherwise what used to be a 26% tax on section 1256 profits becomes closer to 38% if the management/incentive fees can't be deducted.