Tammy has $200,000 of QBI from her neighborhood clothing store a sole proprietorship). Her proprietorship paid $30,000 in W-2 wages and has $20,000 of qualified property.Tammy's spouse earned $50,000 of wages as an employee, and the couple earned $20,000 of interest income during the year and will be filing jointly.What is their QBI deduction for 2019?

Question

Quizplus · Accepted Answer

The QBI deduction is generally the lesser of 20% of the taxpayer's qualified business income (QBI) or 20% of the taxpayer's taxable income minus net capital gains. In this case, Tammy's QBI is $200,000, so 20% of that is $40,000. Since the question does not provide enough information to calculate the taxable income or indicate that the W-2 wages and qualified property limit applies, the basic calculation of 20% of QBI is used, making $40,000 the correct deduction amount.

Tammy Has $200,000 of QBI from Her Neighborhood Clothing Store