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15 April, 23:26

Ellie (a single taxpayer) is the owner of ABC, LLC. The LLC (a sole proprietorship) reports QBI of $900,000 and is not a specified services business. ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $30,000. Ellie's taxable income before the QBI deduction is $740,000 (this is also her modified taxable income). What is Ellie's QBI deduction for 2019

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  1. 15 April, 23:41
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    QBI deduction for 2019 is $148,000

    Explanation:

    Description Amount

    Taxable income before QBI deduction

    exceed $207,500 threshold.

    Capital investment limit is considered

    QBI deduction is lesser of:

    1) 20% of qualified business income $180,000

    ($900,00 * 20%)

    or Greater of

    2) 50% 0f W-2 wages $150,000

    ($300,000 * 50%)

    or

    25% 0f W-2 wages + 2.5% of unadjustment

    basis pf qualified property

    ($300,000 * 25%) + ($300,000 * 2.5%) $75,750

    3) Not more than 20% of modified taxable income

    ($740,000 * 20%) $148,000

    Therefore, QBI deduction for 2019 is $148,000
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