Thomas Drake is a small business owner, operating a manufacturing plant in Chicago, Illinois (as an S-Corp.)He has heard about a new tax break called Section 199A (deduction for qualified business income) wherein he may be entitled to a deduction of up to 20% of his qualified business income.If he can qualify for this deduction, it would result in significant tax savings for his business.Consequently, he contacts your accounting firm to find out exactly what this deduction entails, and how, or if, he can qualify.

Thomas provides the CPA firm with the following information regarding his 2018 estimated income from his business, Rebecca, his spouse's income, and asset and payroll information related to his company.(Thomas and Rebecca file "married filing jointly.")

ItemAmountNet Income from Operations (S Corp)$175,000Spouse's (Rebecca) Income (from unrelated business)$50,000Corporate Payroll$150,000Corporate Total Assets$1,500,000Taxable Income from Form 1040$160,000(Total Tax for Drake's after allowable deductions unrelated to the business)

I am trying to determine the total tax after allowable deductions unrelated to the business