Your Section 199A deduction becomes more complicated when you have
• multiple in-favor trades or businesses; and
• taxable income greater than $415,000 married, filing jointly, or $207,500, filing as single or head of household.
With multiple businesses and 1040 taxable income above the $415,000/$207,500 amounts, you likely need to consider aggregation.
Why? The business-by-business result can be dramatically different from the aggregate result.
Example. Jake is married, with taxable income on his Form 1040 of $691,657. He also operates the three businesses listed below, where we also list the qualified business income (QBI), W-2 wages, and unadjusted basis immediately after acquisition of qualified property.
Business QBI W-2 Wages Property
- Rental $70,844 $6,000 $435,069
- S corp. $124,813 $215,000 $13,878
- Sch. C $275,000 $0 $0
Totals $470,657 $221,000 $448,947
If aggregation was available, Jake would use the totals above to find a Section 199A deduction of $94,131. Without aggregation, the three individual businesses produce a Section 199A deduction of only $37,340.