Thad, a single taxpayer, has taxable income before the QBI deduction of $179,000. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2021, his proprietorship generates qualified business income of $143,200, W–2 wages of $107,400, 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 and use that rounded amount in any future computations. Round your final answer to the nearest dollar. What is Thad's qualified business income deduction?
Thad, a single taxpayer, has taxable income before the QBI deduction of $179,000. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2021, his proprietorship generates qualified business income of $143,200, W–2 wages of $107,400, 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 and use that rounded amount in any future computations. Round your final answer to the nearest dollar.
What is Thad's qualified business income deduction?
Solution: Calculation of Thad's QBI Deduction
Taxable income before QBI deduction = $179000
The amount is above threshold amount of $160700 but below $210700
Applicable Percentage = 100% - ($179000-$160700) / ($210700-$160700)
= 100% - 36.6%
= 63.4%
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