The Qualified Business Income (QBI) Deduction [IRC 199A]: Bridget is the owner of Mile High Brewing, a (fictional) brewery in Denver. Bridgets business is small and has 5 employees who serve as brew masters and creators of beers including new ales, IPAs, and stouts. Each of Bridgets employees earns a salary of $80,000 per year (a total of $400,000 of employee wages). Bridgets taxable income is expected to be $150,000 this year (without the QBI deduction) and the brewery is her sole source of income. Bridget has no capital gains during the year. She has $200,000 of Qualified Property for the purposes of 199A. Bridget operates her brewery as a Single Member LLC, which is disregarded for Federal tax purposes (meaning she is treated as a sole proprietor). Bridget has not qualified REIT dividends or publicly traded partnership income.

a. What is Bridgets estimated qualified business income deduction based on her estimated taxable income above? (See IRC 199A)

i. What is the amount of her qualified business income deduction based on this combined qualified business income amount?

b. Suppose that Bridget has only 1 employee and she only pays the employee $40,000 in wages.

i. What is the amount of Bridgets Qualified Business Income Deduction?