Question

Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible...

Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called Section 199A – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI)…

The deduction is available, regardless of whether taxpayers itemize deductions on Schedule A or take the standard deduction. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file in 2019.

1 Is this a For or From AGI deduction?

2. What line can this deduction be found on Form 1040?

3. Suppose business income was $100,000. Enter the appropriate deduction in the appropriate line to your answer for the previous questions. Ignore all other lines and attach the Form 1040.

4. How is the QBI deduction similar to other From AGI deductions?

5.Regardless of your answer to the previous question, how is QBI deduction similar to other For AGI deductions?

Homework Answers

Answer #1

1. This is From AGI deduction.This will be subtracted from AGI as a part of calculation of the taxable income.

2. As a "below the line" deduction on Line 10 of Form 1040.

3.As a "below the line" deduction on Line 10 of Form 1040 and taxpayer is required to attach Form 8995 or Form 8995-A to the Form 1040 to claim the deduction.

4.QBI is similar to From AGI deduction like standard deduction or itemized deductions.

5.QBI is similar to other For AGI deductions as both can be claimed if a taxpayer does not itemize. For AGI deductions includes the business-related activities that are related to trade and business and also, QBI is a net amount of deduction from qualified trade or business.

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