Question

# 55. Ashley (a single taxpayer) is the owner of ABC, LLC. The LLC (a sole proprietorship)...

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?

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.

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