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In: Accounting

A tax pair engaged in an SSTB and over the top threshold will be subject to...

A tax pair engaged in an SSTB and over the top threshold will be subject to which limitation other than the ordinary taxable income limitation?

Solutions

Expert Solution

In addition to standard or itemized deductions, taxpayers are allowed to deduct from AGI the lessor of the below:

20% of qualified business income from qualified trade/business+20% of qualified real estate investment trust dividends+20% of qualified publicly traded partnership income

or

20% of taxable income (-) Net capital gains

QBI includes items of income, gain, deduction and loss from qualified trades or business

Qualified trade or business may be sole proprietorship or pass thru entities like partnership & S-corp(not C-corp)

ABI deduction limitations - for tax payers with taxable income (before the QBI deduction ) that exceeds the threshold

Taxable Income(before QBI deduction) Treatment of income for SSTB
Upto Thershold $321,400(mfj)/$160,700(single) SSTB=qualified trade/business. Therefore SSTB income is fully eligible for QBI deduction
Fully Phased out at $421,400(mfj)/$210,700(single) SSTB income is not eligible for QBI deduction.

ekkarill92 answered 9 months ago
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