Jason and Paula are married. They file a joint return for 2019 on which they report taxable income before the QBI deduction of $200,000. Jason operates a sole proprietorship, and Paula is a partner in the PQRS Partnership. Both are a qualified trade or business and neither is a specified services business. Jason's sole proprietorship reports $150,000 of net income, W-2 wages of $45,000, and has qualified property of $50,000. Paula's partnership reports a loss for the year, and her allocable share of the loss is $40,000. The partnership reports no W-2 wages and Paula's share of the partnership's qualified property is $20,000. What is their qualified business income deduction for the year?
A) $-0-.
B) $11,750.
C) $22,000.
D) $30,000.
E) None of these.

Question

Quizplus · Accepted Answer

The QBI deduction is 20% of qualified business income. Jason's QBI is $150,000 and Paula's is a loss of $40,000, resulting in a net QBI of $110,000. 20% of $110,000 is $22,000.

Jason and Paula Are Married