Unit Four - Computing the § 199A Deduction Learning Objectives After completing this Unit, you will learn: ›
The definition and relevance of: The “threshold amount”
− − − −
The “applicable percentage”
The “excess amount”, and more specifically ›
I.
The “phase in range”
How the § 199A deduction is calculated
Computing the § 199A Deduction A.
Overview.
1. In order to compute § 199A deduction it is first necessary to determine where the taxpayer stand in relation to the “threshold amount”, and the “phase in range”. 2. The term “threshold amount” means, for any taxable year beginning before 2019, $157,500 (or $315,000 in the case of a taxpayer filing a joint return). This figure will be adjusted by a cost-ofliving adjustment on an annual basis. 3. The “phase-in range” means a range of taxable income, the lower limit of which is the threshold amount, and the upper limit of which is the threshold amount plus $50,000 (or $100,000 in the case of a joint return). 4. If the taxpayer’s taxable income is below the threshold amount, in excess of the threshold amount but within the “phase-in range”, or in excess of the threshold amount plus the “phase in range” will determine how the § 199A deduction is calculated. B. Other Key Definitions. The following are some addition key definitions: 1. Applicable Percentage – “Applicable Percentage” means, with respect to any taxable year, 100 percent reduced (not below zero) by the percentage equal to the ratio that the taxable income of the 29
