Unit Two - The Basics. Learning Objectives After completing this Unit, you will be able to: › ›
Gain an understanding of the basic concepts in determining the §199A deduction.
Define and understand the relevance of the components of the §199A deduction formula including: The “QBI Component” “Combined Qualified Business Income Amount” “Qualified Items” “Qualified REIT dividends” and Qualified Publicly Traded Partnership income ›
I.
You will also learn what constitutes a “Qualified Trade or Business”
Overview
A. The § 199A deduction is allowed to individuals and some trusts and estates (but not corporations). B. The calculation of the § 199A deduction begins with a determination of the taxpayer’s “combined qualified business income”. C. The deduction is limited to 20% of that income but may also limited by the taxpayer’s share of the W-2 wages paid by that business, and the level of qualified property owned by that business. D. Finally, there is an overall limitation based on 20% of the taxpayer’s taxable income in excess of the net capital gain of the taxpayer. E. The §199A deduction is not allowed in calculating adjusted gross income (“AGI”), which means that the deduction will not affect calculations tied to AGI. F. A taxpayer who is subject to the alternative minimum tax (“AMT”) under §55 may take the §199A deduction in computing alternative minimum taxable income. 1. The statute provides that a taxpayer's QBI for AMT purposes equals the taxpayer's QBI for regular tax purposes,
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