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Homework answers / question archive / Thad, a single taxpayer, has taxable income before the QBI deduction of $190,700

Thad, a single taxpayer, has taxable income before the QBI deduction of $190,700

Accounting

Thad, a single taxpayer, has taxable income before the QBI deduction of $190,700. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2019, his proprietorship generates qualified business income of $150,000, W-2 wages of $125,000, and $10,000 of qualified property.

Assume the QBI amount is net of the self-employment tax deduction.

What is Thad's qualified business income deduction

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Computation of Thad's qualified business income deduction:

Given,

Taxable income before QBI Deduction= $190,700

The amount is above threshold Amount of 163,300 but blow 213,300

Applicable percentage= 100%-{190,700-163,300}/{213,300-163,300}

= 100%-27,400/50,000

= 100%-54.80%

= 45.20%

 

Thad's Qualified Business Income = 150,000*20%= 30,000

Thad's Qualified business income Deduction= 30,000*45.20% = $13,560

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