Question

# Roberto is single and has taxable income of \$530,000 in 2018. As a 25 percent partner...

Roberto is single and has taxable income of \$530,000 in 2018. As a 25 percent partner in a partnership that produces \$820,000 of ordinary income from manufacturing a product, his share of partnership income is \$205,000. The partnership paid \$210,000 of W-2 wages and the total unadjusted basis of tangible depreciable business property is \$360,000. What is Roberto’s qualified business income deduction?

Since the taxable income is above the limit of \$157,500 the deduction is subject to limitation.

(1). 20% of QBI is \$41,000 i.e., \$205,000*20%

(2). Limitation of QBI deduction:-

1:- 50% of W-2 Wages = 50% of \$210,000 = \$105,000 (or)

2:- 25% of W-2 Wages plus 2.5% of Unadjusted basis of business property

= 25%*\$210,000 + 2.5%*\$360,000

= \$61,500/-

Greater of above two options being \$105,000 is the limitation as to the deduction under Qualified business income deduction.

Amount of Qualified business income deduction of Roberto's is \$41,000 is within the limit of limitation of \$105,000 and 20% of taxable income of \$106,000 i.e., \$530,000*20% . Hence the amount of \$41,000 can be claimed.

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Need Online Homework Help?

Most questions answered within 1 hours.