Thad, a single taxpayer, has taxable income before the QBI deduction of $173,000. 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 $138,400, W-2 wages of $103,800, and $13,600 of qualified property. What is Thad's qualified business income deduction?

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17 April, 12:00

Thad, a single taxpayer, has taxable income before the QBI deduction of $173,000. 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 $138,400, W-2 wages of $103,800, and $13,600 of qualified property. What is Thad's qualified business income deduction?

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Paola Allison · Answer 1

Thad's qualified business income would be $17,741.

Explanation:

The qualified business income deduction (QBI) permits qualified independently employed and entrepreneurs to deduct up to 20% of their certified business pay on their assessments.

QBI is determined by netting the aggregate sum of qualified salary, increase, derivation and misfortune from any certified exchange or business. This just incorporates things that are assessable salary and are associated with an exchange or business in the United States.