The new 20% deduction for Qualified Business Income

How can you take advantage of this new rule and what does qualified business income mean? Now is the time to start that side business you always dreamed of when you had the time as the new deduction takes effect in 2018. The new law requires that qualified business income be earned in a qualified trade or business. The IRS defines a trade or business as any activity carried on in the production of income from selling goods or providing services. Section 162 of the Internal Revenue Code requires that the business be regular, continuous, and substantial which is a higher standard. In the absence of further guidance from the IRS and the courts which I'm sure is coming soon, I believe that schedule C profit or loss from business, schedule E page 1 rental income, schedule F farm income, and K-1's from non passive activities all are qualified business income eligible for the 20% deduction. No portfolio income from K-1's such as interest, dividends, or capital gains is eligible however except for qualified cooperative dividends, qualified real estate investment trust dividends, and qualified publicly traded partnership income.