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The qualified business income deduction

SEE 1 Chapter 17 · IRS outline 3A8

Owners of sole proprietorships, partnerships and S corporations can deduct up to 20% of their business income under section 199A. OBBBA made it permanent. Below the income threshold it is simple math; above it, wage and property limits and the 'specified service' rules step in. Daniel's plumbing business, Lily's sister-in-law's law practice, Hank's rentals and a REIT fund all land here. Nadia gives Theo a three-step method: find QBI, check the threshold, apply the limits.

In this chapter

1. What qualified business income is
2. Below the threshold: the simple 20%
3. Above the threshold: the wage and property limit
4. Specified service trades or businesses
5. Rentals, aggregation, negative QBI and reporting

This chapter has 5 lessons and 65 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Qualified trade or business
• the 20% deduction
• wage and property limits
• specified service businesses
• aggregation
• negative QBI carryover

Chapter 16: Standard and itemized deductions · Chapter 18: Family and education credits