ExpertHard1 markMultiple Choice
CPA · Question 68 · Area IV: Individual Taxation
A taxpayer has a Qualified Business Income (QBI) of $100,000 from a sole proprietorship. The taxpayer is single with taxable income of $150,000. What is the QBI deduction?
A taxpayer has a Qualified Business Income (QBI) of $100,000 from a sole proprietorship. The taxpayer is single with taxable income of $150,000. What is the QBI deduction?
Answer options:
A.
$30,000
B.
$20,000
C.
$10,000
D.
$0
How to approach this question
Basic QBI: 20% of QBI. Check Taxable Income ($150k). It is below the threshold (approx $191k for 2024/25/26). So full 20% applies. $100k * 20% = $20k.
Full Answer
B.$20,000✓ Correct
B
The QBI deduction is generally 20% of QBI. Since the taxpayer's taxable income ($150,000) is below the threshold for single filers, the W-2 wage/property limitations do not apply. Deduction = 20% * $100,000 = $20,000.
Common mistakes
Applying W-2 wage limits when income is below the threshold.
Practice the full CPA REG Practice Exam 3
72 questions · hints · full answers · grading
More questions from this exam
Q01A CPA is preparing an original tax return for a client who is claiming a refund based on a positi...HardQ02A practitioner is representing a taxpayer in an IRS examination. The taxpayer has a 25% ownership...HardQ03A tax return preparer willfully attempts to understate the tax liability on a client's return by ...HardQ04Which of the following scenarios would most likely result in the assessment of a penalty for fail...HardQ05Regarding the disciplinary authority of State Boards of Accountancy, which of the following state...Hard