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Jennifer is a CPA and a single taxpayer using the standard deduction. In 2020, her CPA...

Jennifer is a CPA and a single taxpayer using the standard deduction. In 2020, her CPA practice generates qualified business income of $162,400 and she has no other income or losses. Jennifer's taxable income before the QBI deduction is $150,000 ($162,400 – $12,400 standard deduction). Jennifer employs an administrative assistant in her practice and pays him $75,000 in wages. The unadjusted basis of depreciable assets employed in the practice totals $30,000.

If amount is zero, enter "0". Assume the QBI amount is net of the self-employment tax deduction.

a. What is Jennifer's qualified business income deduction?
$

b. Determine Jennifer's qualified business income deduction if her CPA practice generates qualified business income of $273,800.
$

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Answer #1

Answer 30000 ; 30000

a. QBI amount = 20% QBI = 20% 162,400 = 32,480

20% mod taxable income = 20% 150000

= 30000

QBI deduction is lesser of the two = 30000


b. lesser of 20% QBI or 20% mod taxable income:
20% * 273800 = 54760
20% * 150000 = 30000

30000

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