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Campbell, a single taxpayer, has $95,000 of profits from her general store, which she operates as...

Campbell, a single taxpayer, has $95,000 of profits from her general store, which she operates as a sole proprietorship. She has no employees, $40,000 of qualified property, and $50,000 of taxable income before the deduction for qualified business income. How much is Campbell’s deduction for qualified business income?

  • $10,000.

  • $95,000.

  • $0.

  • $19,000.

  • $8,000.

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Answer #1

Answer

$ 10,000

Explanation:

Qualified business income is lower of the following:

1. 20% of qualified business income + 20% of Qualified REIT dividends, or

2. 20% of taxable income less capital gains

In this question,

Qualified business income is lower of the following:

1. $ 95,000 * 0.20 = $ 19,000

2. $ 50,000 * 0.20 = $ 10,000

So, the ect answer is $ 10,000.

In case of any doubt, please comment.

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