R1 - Items From Other Entities

Question 1

QBI Deduction

Answer 1

QBI * 20% = Exclusion

• Not allowed for SSTB when above threshold.
• QTB include Engineering and Architectural services tho!

Question 2

Threshold on QBI Deduction

Answer 2

• Taxable income 163K - 213K (S and others) - 50K PHO

- Taxable income 326K - 423K (MFJ) - 100K PHO

Question 3

QBI W-2 Wage and Prop Limitation

Answer 3

• Applies when not SSTB and QBI is above the threshold.
• Limitation is the Greater of:
• 50% of W2 wages for business OR
• 25% of W2 wages + 2.5% of unadj basis of PPE

Then, you compare the limitation to the normal QBI*20%, and the lesser of the two wins!

Question 4

QBI Deduction- Category 1: Below threshold

Answer 4

QTB = FULL 20% allowed (after compared to overall limitation)
SSTB = FULL 20% allowed allowed (after compared to overall limitation)

Question 5

QBI Deduction- Category 2: Above threshold

Answer 5

QTB = Limitation applies 
SSTB = Disallowed

Question 6

QBI Deduction- Category 3: In Between for QTB

Answer 6

A. Tentative QBI = QBI * 20%
B. Sum of all QBI OR T.I - Net Cap Gains * 20% (Overall Limit)

1. Phase in % = (Taxable Income - Threshold Amt) / Phase in Range
2. Excess Amount = QBI * 20% - W2 Wage and PPE Limitation
3. Reduction amount = Excess amount * Phase in %
4. Reduced QBI Deduction = QBI * 20% - Reduction Amount
5. Compare to Overall Limit, and choose lesser of.

Question 7

QBI Deduction- Category 3: In Between for SSTB

Answer 7

1. Phase in % = (Taxable Income - Threshold Amt) / Phase in Range
2. SSTB Applicable % = 100% - Phase in %
3. Reduced Tentative QBI deduction = QBI * SSTB Applicable % * 20%
   4a. Base for W2 Limitation = W2 * SSTB Applicable%
   4b. Base for PPE Limitation = PPE * SSTB Applicable%
   5a. Reduced W2 Limitation = Base for W2 Limitation *50%
   5b. Reduced W2 and; PPE Limitation = Base for W2 * 25% + Base for PPE Limitation * 2.5%
4. If 5a or 5b > #3, STOP HERE, no limitation applies
   If 5a or 5b < #3, continue calc
5. Excess Amount = Reduced Tentative QBI deduction - Reduced W2 and PPE Limitation
6. Reduction Amount = Excess Amount * Phase in %
7. Reduced QBI Deduction = Reduced Tentative QBI deduction - Reduction Amount
8. Compare to Overall Limit, and choose lesser of.

Question 8

Overal Limit

Answer 8

Lesser of:
1. Combined QBI Deduction for all qualifying businesses
OR
2. Taxable Income - Cap Gains