R1 M6 - Section 199A Qualified Business Inc Deduction Flashcards
(6 cards)
Below the threshold for single –> $191,950
MFS $383,900
Which of the following is considered a specified service trade or business (SSTB) for purposes of the qualified business income deduction?
- Health
- Law
- Accounting
- Actuarial Science
- Performance Art
- Consulting
- Athletic
- Financial Services
Calculate the taxpayer’s qualified business income deduction for a qualified trade or business:
Filing status: Single
Taxable income: $100,000
Net capital gains: $0
Qualified business income (QBI): $30,000
W-2 wages: $10,000
A. $5,000 B. $15,000 C. $20,000 D. $6,000
Explanation
Choice “D” is correct. $30,000 QBI × 20% = $6,000. W-2 wage and property limits do not apply to single taxpayers with taxable income before the QBI deduction below the taxable income threshold of $191,950 (2024).
Calculate the overall limit?
Filing status: Single
Taxable income: $100,000
Net capital gains: $0
Qualified business income (QBI): $30,000
W-2 wages: $10,000
($100,000-net capital gain) x 20% = $20,000.00
pick the lesser of 20k or 6k
Calculate the taxpayer’s qualified business income deduction for a specified service trade or business:
Filing status: Single
Taxable income: $300,000
Net capital gains: $0
Qualified business income (QBI): $50,000
W-2 wages: $10,000
A. $10,000 B. $5,000 C. $60,000 D. $0
Explanation
Choice “D” is correct. A single taxpayer with taxable income before the QBI deduction of $241,950 or more (2024) is not eligible for the QBI deduction on income from a specified service trade or business (SSTB).
Choice “A” is incorrect. This amount is the basic QBI deduction of 20 percent of the $50,000 QBI. However, a single taxpayer with taxable income before the QBI deduction of $241,950 or more (2024) is not eligible for the QBI deduction on income from a specified service trade or business (SSTB).
Choice “B” is incorrect. This amount is 50 percent of the W-2 wages: $10,000 × 50% = $5,000. A single taxpayer with taxable income before the QBI deduction of $241,950 or more (2024) is not eligible for the QBI deduction on income from a specified service trade or business (SSTB). The W-2 wage limitation does not apply.
Choice “C” is incorrect. This amount is 20 percent of taxable income: $300,000 × 20% = $60,000. A single taxpayer with taxable income before the QBI deduction of $241,950 or more (2024) is not eligible for the QBI deduction on income from a specified service trade or business (SSTB).
