Janice earned $175,000 of qualified business income this year from her sole proprietorship and has taxable income, before any QBI deduction, of $150,000. Assuming the W-2 wage limitation does not apply, Janice is permitted a QBI deduction of

Question

Quizplus · Accepted Answer

The Qualified Business Income (QBI) deduction allows taxpayers to deduct up to 20% of their qualified business income from a sole proprietorship, S corporation, or partnership. In Janice's case, 20% of $150,000 (her taxable income, which is lower than her QBI of $175,000) equals $30,000. This calculation is based on the lesser of her taxable income or QBI, subject to the overall taxable income limitation.

Janice Earned $175,000 of Qualified Business Income This Year from Her