IRS Examples

160-1  Go Zone: Simple Calculation. Unmarried, sole proprietor, computer repair shop. QBI $100K x 20% vs Taxable (Go Zone) $81K x 20% => Deduction $16,200.

160-2  Capital Gain Backed out of Taxable Before Applying 20% Limitation. Similar to Example 160-1, but Taxable $74K includes $7K gain. Gain backed out. QBI $100K x 20% vs Taxable (Go Zone) $67K x 20% => Deduction $13,400.

160-3  Married, S Corporation, Go Zone, Wages/UBIA Don't Matter. B and C married. C sole owner of X, an S Corporation providing landscaping services. QBI $100K x 20% vs. Taxable (Go Zone) $270K x 20% => Deduction $20K.

161-4  REIT and PTP. Same as Example 160-3, but REIT $1,000 and PTP $500. Combined REIT/PTP $1,500 x 20% => Additional Deduction $300.

166-1  No Wages, No UBIA, No Deduction. $1M QBI x 20% vs. Taxable (No Zone) $980K x 20%. No Wages or UBIA => Deduction $0K.

166-2  UBIA. QBI $4M x 20% vs. UBIA $10M x 2.5% => $250K vs. Taxable (No Zone) $3.98M x 20% => Deduction $250K.

166-3  Wages and UBIA. LLC 30% owner. QBI $900K x 20% vs. greater of $300K Wages x 50% or (Wages $300K x 25% + UBIA $30K x 2.5%) => $150K vs. $Taxable (No Zone) 880K x 20% => Deduction $150K.

167-4  Positive QBI; Negative PTP Carried Forward. S Corp 30% owner. QBI $3M x 20% vs. greater of Wages $1M x 50% or (Wages $1M x 25% + UBIA $100K x 2.5%) => $500K vs. Taxable (No Zone) $1.88M x 20% => Deduction $376K. Negative PTP carried forward to next year.

167-5  Twilight Zone, non-SSTB, Phase-in. QBI $300K x 20% vs. $Taxable (Twilight Zone) 375K x 20% => $60K (tentative deduction). Wages $40K x 50% => $20K. $60K - $20K => Excess Amount $40K x 40% unconsumed Twilight Zone => $16K + Wages Base $20K => Deduction $36K.

168-6  Twilight Zone, SSTB, Phase-in and Phase-out. Same as Example 167-5, but SSTB causes phase-out in addition to Wage/UBIA phase-in. Previous result $36K x 40% (unconsumed Twilight Zone or "Applicable Percentage") => Deduction $14.4K.

169-7  No Aggregation. X, Y, Z. QBI "X" $1M x 20% vs. Wages $500K x 50% => $200K; QBI Y $1M x 20% vs. Wages $0K x 50% => $0K; QBI Z $2K x 20% vs. Wages $500K x 50% => $400; XYZ $200,400 vs. Taxable (No Zone) $2.722M x 20% => Deduction $200,400.

169-8  Aggregation. Same as Example 169-7, but aggregate XYZ. Aggregated QBI $2.002M x 20% vs. Aggregated Wages $1M x 50% => Deduction $400,400.

170-9  No Aggregation, Netting of Negative QBI. Same as Example 169-7, but QBI Z Loss $600K. Loss $600K netted 1/2 to X, 1/2 to Y. QBI X $1M - Loss $300K => Net QBI $700K x 20% vs. Wages $500K x 50% => Deduction $140K for X. Deduction $0 for Y (no wages).

170-10  Aggregation, No Netting of Negative QBI Required. Same as Example 170-9, but aggregate XYZ. Aggregated QBI $1.4M x 20% vs. Aggregated Wages $1M x 50% => Deduction $280K.

171-11a  No Aggregation, Netting of Negative QBI, Combined Negative QBI Carried Forward. Same as Example 169-7, but Z QBI Loss $2.15M. Loss $2.15M netted 1/2 to X, 1/2 to Y. QBI XY $2M - Loss $2.15M => Net QBI Loss ($150K) => Deduction $0K.

171-11b  Netting of Negative QBI. 2019 year. QBI 2018 Loss ($150K) carried forward to 2019, netted with other QBI XYZ, QBI $200K - $154,286 Loss => Net QBI $45,714 x 20% vs. Wages $100K x 50% => Deduction for business "X" $9,143.

172-12a  Aggregation, Negative QBI 2018 Carried Forward to 2019 (again Net Negative QBI), then Carried Forward to 2020. Same as Example 171-11a, but aggregate Loss Carryforward with 2019 QBI XYZ. Aggregated 2019 QBI Loss ($150K) => Deduction $0. QBI Loss ($150K) carried forward to 2020.

172-12b  Aggregation, Negative QBI Carried Forward to 2019, Net Positive QBI. Same as Example 171-11b, but aggregate Loss Carryforward with QBI XYZ. Aggregated QBI $80K x 20% vs. Aggregated Wages $100,500 x 20% => Deduction $16K.

243-1a  Trust with Partners A and B (Who Are also Trust Beneficiaries). Trust owns 25% of PRS Partnership and 100% of LLC. AB together own 75% of PRS. A is 50% beny of Trust. B is 25% beny of Trust. Trust aggregated QBI Loss ($47K). Sets the stage for individual and trust §199A Deduction results for 243-1b through 243-1d.

245-1b  Trust Beneficiary A. A QBI Loss ($47K) x 50% => ($23.5K) + $100K separate QBI => Aggregated QBI $76.5K x 20% vs. Aggregated Wages $40K x 50% => $15.3K vs. Taxable (No Zone) $357.5K x 20% => Deduction $15.3K.

245-1c  Trust Beneficiary B. B QBI Loss ($47K) x 25% => ($11,750) carried forward to next year. Deduction $0.

245-1d  Trust. Trust QBI Loss ($47K) x 25% => ($11,750) carried forward to next year. Deduction $0.