Yr 2019

Thad, a single taxpayer, reports taxable income before the QBI deduction of $198,500. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During the tax year, his proprietorship generates qualified business income of $158,800 after deducting self-employment taxes, W-2 wages of $119,100, and $8,800 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. If required, round any division to two decimal places. Round your final answer to the nearest dollar. What is Thad's QBI deduction? 8,137 x Feedback Check My Work With the reduction in the corporate income tax rate to 21 percent in 2018, Congress needed to provide a means of reducing the taxes on businesses that operate in different business forms (e.g., sole proprietors, partnerships, and S corporations). Congress accomplished this with the creation of the deduction for qualified business income ($ 199A), which applies to noncorporate taxpayers. To determine the qualified business income deduction," one has to understand the definition of a "qualified trade or business" and "qualified business income