Question

# Margen is single and has taxable income before the QBI deduction of \$173,300. Margen owns a...

Margen is single and has taxable income before the QBI deduction of \$173,300. Margen owns a sole proprietorship (not a professional service) that produced net ordinary income of \$180,000 and subject to self-employment tax of \$21,300. The business paid total W-2 wages of \$74,000 and the total unadjusted basis of prop­erty held by the business is \$120,000. How much is Margen’s QBI deduction?

Margen is filing singlly

Calculation of QIB on the basis of taxable Income if taxable Income Exceeds \$ 157500, the following are the calculation.

In this case Taxable Income Exceeds \$ 157500

Ist Method : 50% of Companies W-2 Wages = 50% * \$ 74000 = \$ 37000

IInd Method : 25% of W-2 wages Plus 2.5% of unadjusted basis of all qualified properties

=  25% * 74000+ 2.5% * \$ 120000

= \$ 18500+ \$3000 =\$ 21500

Margen can choose greater deduction of QIB that is = \$ 37000

#### Earn Coins

Coins can be redeemed for fabulous gifts.