Question

Ellie (a single taxpayer) is the owner of ABC, LLC. The LLC (a sole proprietorship) reports QBI of $900,000 and is not a specified services business. ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $30,000. Ellie's taxable income before the QBI deduction is $740,000 (this is also her modified taxable income). What is Ellie's QBI deduction for 2019

Answer 1

QBI deduction for 2019 is $148,000

Step-by-step explanation:

Description Amount

Taxable income before QBI deduction

exceed $207,500 threshold.

Capital investment limit is considered

QBI deduction is lesser of:

1) 20% of qualified business income $180,000

($900,00 × 20%)

or Greater of

2) 50% 0f W-2 wages $150,000

($300,000 × 50%)

or

25% 0f W-2 wages + 2.5% of unadjustment

basis pf qualified property

($300,000 × 25%) + ($300,000 × 2.5%) $75,750

3)Not more than 20% of modified taxable income

($740,000 × 20%) $148,000

Therefore, QBI deduction for 2019 is $148,000