Question

55. Ashley (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. Ashley’s taxable income before the QBI deduction is $740,000 (this is also her modified taxable income). What is Ashley’s QBI deduction for 2019?

Answer 1

As per the data gievn in question, The ABC, owned by Ashley, reports QBI of Net Income, $900,000.

So, QBI deduction without any limits = 20% of Net Income

= 0.20*900,000 = $180,000

It is provided in the question that she paid a total of $300,000 as W-2 wages. Also, the total unadjusted property or qualififed property held by her is $30,000.

Applying two limitations; Greater of below

a. 50% of W-2 wages = 0.50*300,000 = $150,000

b. 25% of W-2 wages + 2,5% of Qualified Property = 0.25*300,000 + 0..25*30,000 = $75,750

Her taxable income before QBI deduction is $740,000

So, 20% of taxable income = 0.20*740,000 = $148,000

Hence, Ashleys final QBI deduction is $148,000.