Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single-member LLC (a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $381,400 (this is also their taxable income before the deduction for qualified business income). Determine their QBI deduction for 2019.

$14,400

Explanation:

QBI deduction can be as much as 20% of QBI but it cannot exceed 20% of taxable income before QBI deduction and/or capital gains.

QBI deduction also starts to phase out if the couple's income is higher than $321,400 (for 2019).

phase out = 1 - [($381,400 - $321,400) / $100,000] = 1 - 0.6 = 40%

we must choose the higher between:

tentative QBI deduction based on W-2 wages = 50% x $40,000 x 40% = $8,000

                     or

QBI deduction based on capital investment limit = (25% x $40,000 x 40%) + $0 (no qualified property) = $4,000

allowable QBI deduction:

($300,000 x 20% x 40%) - {[($300,000 x 20% x 40%) - $8,000] x (1 - 40%)} = $24,000 - [($24,000 - $8,000) x 0.60] = $24,000 - $9,600 = $14,400

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.