Question

Shelly has $200,000 of QBI from her local jewelry store (a sole proprietorship). Shelly's proprietorship paid $30,000 in W–2 wages and has $20,000 of qualified property. Shelly’s spouse earned $74,000 of wages as an employee, they earned $20,000 of interest income during the year, and they will be filing jointly and using the standard deduction.

What is their QBI deduction for 2018?

Answer 1

QBI deduction for 2018 = $40,000

Step-by-step explanation:

given data

sole proprietorship = $200,000

proprietorship paid = $30,000

qualified property = $20,000

spouse earned = $74,000

interest income = $20,000

solution

we know that for joint filter taxable income is less than $315000

QBI is limited to 20% of qualified business income

so

here total taxable income is $200000 + $74000 = $274000 that is less than threshold limit of $315000

so claim QBI deduction of 20% on qualified business income $200000

so

QBI deduction for 2018 is

QBI deduction for 2018 = QBI × 20%

QBI deduction for 2018 = $200000 × 20%

QBI deduction for 2018 = $40,000