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stillmoretolearn
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Question on QBI deduction and consulting as a SSTB?

I have a side gig "consulting" for a few expert networks such as GLG, Alphasights, and Guidepoint Global. It consists of 30-60 minute paid calls, usually with investors trying to learn more about my primary industry. The calls are usually explaining engineering/technical concepts in a view relevant to investors, but also includes questions on the competitive landscape, future growth opportunities, etc. 

 

I'm trying to figure out if this counts as Consulting as an excluded specified service trade or business (SSTBs), for the purpose of claiming the QBI deduction on this income (which is under my own name and SSN - no LLC). From 26 CFR § 1.199A-5:

 

For purposes of section 199A(d)(2) and paragraph (b)(1)(vi) of this section only, the performance of services in the field of consulting means the provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems. Consulting includes providing advice and counsel regarding advocacy with the intention of influencing decisions made by a government or governmental agency and all attempts to influence legislators and other government officials on behalf of a client by lobbyists and other similar professionals performing services in their capacity as such. The performance of services in the field of consulting does not include the performance of services other than advice and counsel, such as sales (or economically similar services) or the provision of training and educational courses. For purposes of the preceding sentence, the determination of whether a person's services are sales or economically similar services will be based on all the facts and circumstances of that person's business. Such facts and circumstances include, for example, the manner in which the taxpayer is compensated for the services provided. Performance of services in the field of consulting does not include the performance of consulting services embedded in, or ancillary to, the sale of goods or performance of services on behalf of a trade or business that is otherwise not an SSTB (such as typical services provided by a building contractor) if there is no separate payment for the consulting services. Services within the fields of architecture and engineering are not treated as consulting services.

 

I don't think I fall under the engineering exemption, since these aren't engineering design services, so it comes down to the meaning of "advice and counsel". I don't tell these clients what to do, I answer their questions about my industry so that they can make their own decisions with additional background information. 

 

Is anyone else here in the same boat? How do you treat this type of income?

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1 Reply

Question on QBI deduction and consulting as a SSTB?

the reg says 

the provision of professional advice and counsel to clients to assist the client in achieving goals and solving problems.

 

don't know enough about you to determine if you're giving professional advice. and there can be differing opinions even if more info was provided.  

 

here's from an article in the Journal of Accountancy

The determination of whether clients are considered to be involved with consulting services is a facts-and-circumstances, case-by-case scenario. When making this determination, a CPA should look for instances where their client is providing recommendations and advice without any type of corresponding goods or services, especially if their client is providing a formal written recommendation report.

 

for example, if you were involved in marketing and said to a client run an ad on xyz and then went out and placed the ads you would not be an SSTB. say the same to a client but tell them to run the ad you're an SSTB.

  

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