Kelly operates a sole proprietorship with qualified business income of $920,000. Her business paid W-2 wages of $250,000 and owns depreciable tangible property with an unadjusted basis of $410,000. Compute Kelly's allowable Section 199A deduction.

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Tentative deduction is $184,000 ($920,000 x 20%). However, deduction is limited to greater of $125,000 ($250,000 W-2 wages x 50%) or $72,750 ($250,000 W-2 wages x 25% + $410,000 property x 2.5%).

Kelly Operates a Sole Proprietorship with Qualified Business Income of $920,000