Page 217 - Small Business IRS Training Guides

Qualified Business Income Deduction

COMPEHENSIVE EXAMPLE (CONTINUED)
Example 7 (continued)
Step 5 –
QBI Component.
Fred’s total QBI Component is $30,415, which is the sum of all his QBI Components for

each trade or business:
Accounting Gas
Aggregation 1
Firm Station
20% QBI 34,609 231 0
Less: Phased-in Reduction (4,425) (0) (0)
Equals: QBI Component 30,184 231 0

Step 6 – REIT/PTP Component.

Fred’s REIT/PTP Component is 20% of the sum of all his REIT dividends plus his PTP

income and losses, $100 (500 x 20%).

So, Fred’s QBI deduction before the income limitation is $30,515 (30,415 QBI
Component + 100 REIT/PTP Component).

Step 7 –
Taxable income limitation.
Fred’s QBI is limited his taxable income less net capital gain. So, his QBI deduction is

$30,515, which is the lessor of:
• QBI deduction before the income limitation = $30,515, or

• 20% of (TI – NCG): (205,500 - 2,000) x 20% = $40,700

May 2019

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