Question

Suzanne, a single taxpayer, operates a printing business as a sole proprietor. The business has two employees who are paid a total of $90,000 during 2019. Assume that the business has no significant assets. During 2019, the business generates $150,000 of income, and Suzanne's taxable income before the QBI deduction is $155,000. a. What is Suzanne's qualified business income deduction

Answer 1

Answer:

ANSWER = LOWER OF ABOVE ( i.e. POINT 1 AND 4) = $30,000

Explanation:

1) WE ASSUME THAT SUZANNE'S BUSINESS INCOME IS SAME AS QUALIFIED BUSINESS INCOME (QBI) i.e.$150,000.

CALCULATION OF QBI DEDUCTION:-

1) 20% OF QBI (OR TAXABLE INCOME IF LOWER) = $30,000

{$150000*20% = $30,000)

2)50% OF WAGES ($90,000 * 50%) = $45,000

3) 25% OF WAGES + 2.5% OF ASSETS = $22,500

4) GREATER OF POINT 2 AND 3 = $45,000

ANSWER = LOWER OF ABOVE ( i.e. POINT 1 AND 4) = $30,000