Qualified Business Income (Q81) Deduction (LO 4.11) Sanjay is a single taxpayer that operates a curry cart on the streets of Baltimore. The business is operated as a sole proprietorship with no employees (Sanjay does everything). Sanjay's Schedule C reports income of $87,000. His taxable income is $80,000 and includes no capital gains. Compute Sanjay's QBI deduction.
Qualified Business Income (Q81) Deduction (LO 4.11) Sanjay is a single taxpayer that operates a curry cart on the streets of Baltimore. The business is operated as a sole proprietorship with no employees (Sanjay does everything). Sanjay's Schedule C reports income of $87,000. His taxable income is $80,000 and includes no capital gains. Compute Sanjay's QBI deduction.
Chapter2: The Deduction For qualified Business Income For Pass-through Entities
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:Problem 4-19
Qualified Business Income (QBI) Deduction (LO 4.11)
Sanjay is a single taxpayer that operates a curry cart on the streets of Baltimore. The business is operated as a sole proprietorship with no employees (Sanjay does everything). Sanjay's Schedule reports income of $87,000. His taxable income is $80,000 and includes no capital gains.
Compute Sanjay's QBI deduction.
$ 17,400 X
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The QBI deduction is a new deduction for individual taxpayers reporting income from a pass-through entity such as a sole proprietorship, partnership, limited liability company, or S corporation. The QBI deduction is available to individual taxpayers as a "below the line" deduction (after adjusted gross
income) and is also available taxpayers who take the standard deduction. The deduction is generally 20 percent of a taxpayer's qualified business income (QBI) from the pass-through entity. However, the QBI deduction is subject to a number of limitations and exceptions.
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