Final answer:
Qualified property for the QBI deduction includes tangible depreciable property used in the production of qualified business income and placed in service during the last 10 years or its applicable recovery period. It excludes land, intangible assets, and property not utilized in the business. Accurate records of property acquisition and use are essential for correct deduction calculation.
Step-by-step explanation:
When calculating the deduction for qualified business income (QBI) under § 199A of the Internal Revenue Code, qualified property is a critical consideration. Qualified property includes tangible property subject to depreciation that is held by and available for use in the qualified trade or business at the close of the tax year, and which is used in the production of qualified business income. It must have been placed in service by the taxpayer within the last 10 years (or over its applicable recovery period, if shorter).
To be considered qualified property for this deduction, the property must also be used in the taxable year for the production of QBI. Examples of qualified property may include machinery, equipment, buildings, and certain improvements. However, land, intangible property, and property not used in the course of the trade or business do not qualify.
It is important to maintain accurate records of property acquisition dates, cost, and usage within the business to properly calculate the deduction for qualified business income. This ensures that the business can maximize their benefits under the tax law.