ch 2 notes.docx - The Deduction for Qualified Business...

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The Deduction for Qualified Business Income (Section 199A) Corporate income tax rate = 21% (2018) For noncorporate taxpayers General rule: deduction for QBI is 20% of QBI o Through a sole proprietorship, partnership or an S corporation o The lesser of: 20% of QBI or 20% of modified taxable income The last deduction taken in determining taxable income Qualified business income: ordinary income less ordinary deductions a TP earns from a “qualified trade or business” conducted in the US by the TP o Includes the distributive share of these amounts from each partnership or S corp interest held by the TP o Doesn’t include certain types of investment income: Capital gains or losses Dividends Interest income (unless properly allocable to a trade or business, such as lending) Certain other investment items The reasonable compensation paid to the TP with respect to any qualified trade or business Guaranteed payments made to a partner for services rendered o
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  • Spring '19
  • k bohonowicsz
  • Taxation in the United States, QBI

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