Question

please explain where $36140 come from. Also, please explain where $50000 come from in the calsulation of 40%.

Loyes or (b) sum of 25% of W-2 wages plus 2.5% of original cost of depreciable property Example 32 Assume the same facts as example 31, except that the same facts as example 31, except that Hanna operates a con- g tim as a sole proprietorship and her net income is $187,700. What is Hanna's QBI deduction for 2019? What is her taxable income? Discussion: Since Hanna operates a business that is considered a specified ser- vice business, her QBI will be limited if her taxable income before considering the QBI deduction exceeds $160,700. Hanna's deduction based on her QBI is $37,540 ($ 187,700 X 20%). Hanna's taxable income is $180,700 ($187.700 + $5,000 $12,000), and her QBI deduction based on taxable income before considering the phase-out is $35,500 ($180,700 X 20%). Therefore, because the $36,140 is lower, this is her QBI deduction before the phase out. Hanna's taxable income exceeds the beginning phase-out by $20,000 ($180,700 - $160,700), so she must reduce her QBI deduction by 40% ($20,000 + $50,000). Hanna's QBI deduction is $21.684 [$36.140 x (1 -0.40)] and her taxable income is $159,016 ($180,700 - $21,684). OBI deduction for 2019? What is her tax- Example 33 Assume the same facts as example 32, except that Hanna's income from the consulting firm is $247,000. What is Hanna's QBI deduction for 2019? Wha able income? vahle income before considering her QBI deductions is

Answer 1

Solution: 20% of $180,700 is $36,14 and not 35500.

For singles and head of household filers if taxable income exceeds $160,700 then QBI deduction is phased out over the next $50,000. Taxable income has exceeded $160,700 by $20,000. Percentage of $ 20,000 in $50,000 (phase out amount) is ($20,000 / $50,000 = 40%).