Qualified business income. Quincy owns a small but fancy restaurant in Los Angeles. This is NOT a “specified service trade or business.” In 2020, he earned a net profit of $600,000 (i.e., profit after paying employee wages and other expenses). He is single. He also had $22,400 of interest income and took the standard deduction ($12,400). He had no other income. He had several employees who he paid a total of $200,000 in wages. He owned depreciable equipment he had bought 5 years earlier for $100,000 and no other property. How much is his qualified business income (QBI) deduction?

A) $52,500 [$200,000 wages x 25% + $100,000 property x 2.5%]

B) $122,000 [$610,000 taxable income x 20%]

C) $120,000 [$600,000 QBI x 20%]

D) zero

Answer rating: 100% (QA)

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