Question

The Qualified Business Income Deduction (QBID) exists for small businesses. If a person had $18,000 in small business Net Profits (Income) in one year, then how much of the $18,000 would be included in Taxable Income?

$14,400.

$18,000.

$3,600.

$9,000.

Answer 1

The Qualified Business Income Deduction (QBID) which exists for small businesses is usually 20% of the income of the business.

Here, we have net profit of the small business which is nothing but a income of the business

Therefore, the QBID is calculated as follows :

given : net profit = 18000

QBID = 20% of the net profit

         = 18000*20/100

   = 3600

Therefore, the QBID is 3600.

Now the taxable income is calculated as follows :

Taxable Income = Net Profit - QBID

                       = 18000 - 3600

Taxable Income = 14400

Therefore, the answer is = $14,400 of $18000 would be included in Taxable Income.