The QBI for each business is subject to the greater of two limitations: (1) 50% of W-2 wages ($20,000, or $40,000 x 50%) or (2) 25% of W-2 wages plus 2.5% of unadjusted basis {$40,000, or [($40,000 x 25%)= $10,000 + ($1.2 million x 2.5%) = $30,000]}. The greater of the two limitations is $40,000. Because this $40,000 is less than Patricia's tentative $50,000 QBI, the lower amount must be used. Patricia's QBI for this trade or business, then, is $40,000.
-Dan receives a proportionate current (nonliquidating) distribution when the basis of his partnership interest is $30,000. The distribution consists of $10,000 in cash and property with an adjusted basis to the partnership of $24,000 and a fair market value of $26,500. Dan's basis in the noncash property is:
A) $26,500.
B) $24,000.
C) $20,000.
D) $10,000.
E) $0.

Question

Quizplus · Accepted Answer

Dan's basis in the noncash property is calculated by reducing his partnership interest basis by the cash received first. His initial basis is $30,000, and after receiving $10,000 in cash, his remaining basis is $20,000, which becomes his basis in the noncash property.

The QBI for Each Business Is Subject to the Greater