Homework Answers
Answer -
Step - (1) - Facts of the Case Given -
In 2018, Shira is a single taxpayer that operates a hot dog cart on the streets of Chicago. The business is operated as a sole proprietorship with no employees.
Shira's Schedule C reports Income of $92000.
Her Taxable Income is $78000.
.
Step - (2) - Determination of the Shira's QBI deduction -
As per U.S. Internal Revenue Service,
The Qualified Business Income Deduction (QBI) allowed will be the Lesser of:
- 20% of Qualified Business Income, or
- 20% of Taxable Income
In the given case,
Shira's QBI deduction = ($78000 * 20%) = $15600.
Hence, Option - (C) is Correct.
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