Question

Tammy has $200,000 of QBI from her neighborhood clothing store (a sole proprietorship). Her proprietorship paid $30,000 in W-2 wages and has $20,000 of qualified property. Tammy's spouse earned $50,000 of wages as an employee, they earned $20,000 of interest income during the year, and they will be filing jointly. What is their QBI deduction for 2019? a.$40,000. b.$-0-. c.$54,000. d.$50,000. e.None of these choices are correct.

Answer 1

$40,000

Step-by-step explanation:

The computation of QBI deduction for 2019 is given below:-

Taxable Income of Tammy and his spouse = Qualified Business Income (QBI) + Tammy’s spouse wages+ Interest Income

= $200,000 + $50,000 + $20,000

=$270,000

a) 20% of Qualified Business Income = 20 % × $200,000

= $40,000

b) 20% of Modified taxable income = 20 % × $270,000

= $54,000

Hence, the 2018 Qualified Business Income (QBI) deduction is "$40,000." Since 20 percent ($54,000) of Modified Taxable Income is less than 20 percent of QBI ($40,000).