Mason (single) is a 50 percent shareholder in Angels Corporation (an S Corporation). Mason receives a $186,500 salary working full time for Angels Corporation. Angels Corporation reported $426,000 of taxable business income for the year (2023). Before considering his business income allocation from Angels and the self-employment tax deduction (if any), Mason's adjusted gross income is $186,500 (all salary from Angels Corporation). Mason claims $63,000 in itemized deductions. Answer the following questions for Mason.

Question. Assume the same facts as question (b), except that Angels Corporation reported $176,000 of taxable business income for the year. What is Mason's deduction for qualified business income? Ignore the wage-based limitation when computing the deduction.

AN EXAMPLE TO FOLLOW

((((Mason (single) is a 50 percent shareholder in Angels Corp. (an S Corporation). Mason receives a $180,000 salary working full time for Angels Corp. Angels Corp. reported $400,000 of taxable business income for the year (2023). Before considering his business income allocation from Angels and the self-employment tax deduction (if any), Masons adjusted gross income is $180,000 (all salary from Angels Corp.). Mason claims $50,000 in itemized deductions. Answer the following questions for Mason)))

($8,130. Because the business income allocated to Mason is a specified service trade or business, the specified service requirement phases in (the QBI deduction is phased out) pro rata between $182,100 and $232,100 of taxable income before the QBI deduction. Given these facts, Masons taxable income before the QBI deduction is $205,000 ($180,000 salary + $75,000 business income allocation $50,000 itemized deductions). Because Masons taxable income (before the QBI deduction) is of the way through the specified service requirement phase-in range (deduction phase-out range), Mason is not allowed to deduct 45.8% of the full QBI deduction (ignoring wage-based limitation). Consequently, his QBI deduction is {Note: 1.458 represents the percentage he is able to deduct}. The taxable income limitation of does not limit the deduction.))