Question

Elizabeth is a single, self-employed accountant. She has net Schedule C income of $120,000. Her taxable income was $99,522 for the QBI thresholds. She does not have any employees, and her only income is from her business. She will claim a depreciation deduction for several assets used in her business. Given the information provided, choose the response that best describes how Elizabeth will calculate the amount of her qualified business income deduction.

To accurately figure the amount, the computation must take into account the UBIA of any property held by her business.

She is able to figure her deduction using a simple, two-step computation since her taxable income is below the lower threshold.

Since she is involved in a specified service trade or business, she will need to use a multi-step process to compute the deduction.

None of these choices apply because Elizabeth is not entitled to the deduction.

Answer 1

The correct option is: She is able to figure her deduction using a simple, two-step computation since her taxable income is below the lower threshold. Explanation-The accounting profession is included in specified service trade or business. However, the taxable income is lower than the threshold, therefore, deduction is lower of: 20%of QBI plus 20% of REIT dividends and PTP income Or 20% of her taxable income less net capital gain. Therefore, she needs to follow simple two step process to compute the deduction.