Are healthcare practices specified service trades or businesses (SSTB)?

Section 199A(d)(2) defines SSTBs as trades or businesses involving the performance of services in fields including health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, and any business where the principal asset is the reputation or skill of one or more employees or owners. Treasury Regulations under Section 1.199A-5 clarify that the field of health includes physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists, and other similar healthcare professionals. Health does not include services not directly related to a medical services field, such as operating health clubs or health spas that provide physical exercise or conditioning, payment processing, or the research, testing, manufacture and sale of pharmaceuticals or medical devices. Splitting a practice into SSTB and non-SSTB pieces mostly fails when the owners are the same. If a business provides property or services to an SSTB and there is 50 percent or more common ownership, the portion provided to the SSTB is treated as a separate SSTB; the Treasury's own example is a dentist whose building entity leases to the dental practice, and that rent is SSTB income. What can still qualify is business with unrelated parties, such as space leased to outside tenants. A de minimis rule also applies: a business with $25 million or less of gross receipts is not an SSTB if less than 10 percent of those receipts come from the specified service.