Tips earned in a business count only above the business's other deductions
What the document says“such qualified tips shall be taken into account under subsection (a) only to the extent that the gross income for the taxpayer from such trade or business for such taxable year (including such qualified tips) exceeds the sum of the deductions”
The section provides that where qualified tips are received in the course of a trade or business other than performing services as an employee, they count toward the deduction only so far as the gross income from that business for the year, including the tips, exceeds the deductions allocable to that business other than the tip deduction itself.
What the document actually says“such qualified tips shall be taken into account under subsection (a) only to the extent that the gross income for the taxpayer from such trade or business for such taxable year (including such qualified tips) exceeds the sum of the deductions”
Tips earned in a business count only up to a point. The business income must first clear its other costs.
This applies to people who are not employees. A business running at a loss gets no break. Only the part above costs counts.
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