QBI for a "consultant"

[DebitThatCreditThis]

Client came to me with a newish LLC (S Corp), "ABC Consulting", selected the NAICS code of "management consulting" on the formation apps.

I come to learn that his business is more project management than consulting.

Being that it's the first year filing, I'd like to not classify it as an STTB.

What do ya'll think? Consulting in the name + the NAICS code, etc doesn't bode well? I have a client at my W2 job with consulting in the name and we take full QBI on it.

[Rapid Robert]

I don't think there is any statutory definition based on NAICS code or the name of the business. In the end you are taking a position, and the facts and circumstances are primarily what is going to matter.Change the NAICS code or not, you'll never know if it made any difference good or bad.

I don't think anyone knows what criteria if any IRS uses to select returns from SSTB audit. After all it's still a temporary provision, so maybe they haven't developed a lot of learning data yet.

[TaxGuyBill]

I agree with Robert. The name and business code do not determine things, ut you should be able to defend your position whether you think it is a SSTB or not. In case you don't have it, here is the definition from Regulation 1.199A-5:

(vii) Meaning of services performed in the field of consulting. 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.