Ellie (a single taxpayer) is the owner of ABC, LLC.The LLC (a sole proprietorship) reports QBI of $900,000 and is no services" business.ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $ taxable income before the QBI deduction is $740,000 (this is also her modified taxable income).What is Ellie's QBI de 2018?

Question

Quizplus · Accepted Answer

Ellie's QBI deduction is limited by the greater of either: 
50% of the W-2 wages paid by ABC ($300,000 x 50% = $150,000), or
the sum of 25% of the W-2 wages paid plus 2.5% of the unadjusted basis of property held by ABC (($300,000 x 25%) + ($2,250,000 x 2.5%) = $75,750 + $56,250 = $132,000).
Since $150,000 is greater than $132,000, Ellie's QBI deduction is $132,000.
Note that the QBI of $900,000 is not limited by the W-2 wages or unadjusted basis of property tests, so it is fully taken into account to calculate the QBI deduction.

Ellie (A Single Taxpayer) Is the Owner of ABC, LLC