Question

bruce is a cpa who operates his tax service business as a sole proprietorship. he files a joint tax return with his wife. their tax return reported $375,100 in taxable income and $395,000 in profit from the tax service, before the deduction for qualified business income (qbi). how much of the income from bruce's tax services is eligible for the qbi deduction?

Answer 1

The income from Bruce's tax services that is eligible for the qualified business income (QBI) is $216,065.

What is the qualified business income deduction?

The IRS allows self-employed persons qualified business income (QBI) deductions.

The QBI deduction is 20% of business income.

Bruce's joint taxable income = $375,100

Profit from tax services = $395,000

Total taxable income in 2021 must be under $329,800 for joint filers.

Determining the Percentage for QBI:

$375,100 - $329,800 = $45,300

= 45.3% ($45,300 ÷ $100,000)

45.3% is not eligible for the QBI deduction

Qualified Business Income percentage = 54.7% (1 - 45.3%)

= $216,065 ($395,000 x 54.7%)

Amount of the QBI deduction = $43,213 ($216,065 x 20%)

Learn more about the qualified business income deductions at brainly.com/question/18496851

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