Question

What is the purpose of the qualified business income deduction under § 199A? How is the deduction calculated? What information does the partnership report?

Answer 1

1. The sole proprietorship, partnership or s corporation can deduct upto 20% of the qualified business income as to promote the business on the small scale and to provide the business more income for the partners or workers.

2. The qualified business income or taxable income (of partner, sole proprietor) whichever is less will be multiplied by 20% for the deduction.

3. The partnership should report the information regarding the income or revenue of the firm and the expenses which are qualified for deduction.