Certain taxpayers are eligible for a deduction for Qualified Business Income (QBI). Which of the following taxpayers are eligible for the QBI deduction?
I.A single taxpayer with taxable income of $100,000 who owns 100% of the stock of a regular corporation that manufactures rustic furniture.
II.A single taxpayer with taxable income of $250,000 who is a 50% partner in an accounting firm.
III.A single taxpayer with taxable income of $100,000 that operates an accounting business as a sole proprietorship.
IV.A single taxpayer with taxable income of $125,000 who owns 100% of the stock of an S Corporation that produces oak tables.

Question

Certain taxpayers are eligible for a deduction for Qualified Business Income (QBI). Which of the following taxpayers are eligible for the QBI deduction?
I.A single taxpayer with taxable income of $100,000 who owns 100% of the stock of a regular corporation that manufactures rustic furniture.
II.A single taxpayer with taxable income of $250,000 who is a 50% partner in an accounting firm.
III.A single taxpayer with taxable income of $100,000 that operates an accounting business as a sole proprietorship.
IV.A single taxpayer with taxable income of $125,000 who owns 100% of the stock of an S Corporation that produces oak tables.
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Quizplus · Accepted Answer

Only the taxpayers who operate a qualified trade or business are eligible for the QBI deduction. In this case, statements I and II are incorrect since regular corporations and service-oriented trades, such as accounting firms, are not considered qualified trades or businesses. Statement III is correct since the taxpayer operates an accounting business as a sole proprietorship, and statement IV is correct since the taxpayer owns a qualified S Corporation. Therefore, only statements III and IV are correct.

Certain Taxpayers Are Eligible for a Deduction for Qualified Business