The QBI for Each Business Is Subject to the Greater

question 33

Multiple Choice

The QBI for each business is subject to the greater of two limitations: (1) 50% of W-2 wages ($20,000, or $40,000 x 50%) or (2) 25% of W-2 wages plus 2.5% of unadjusted basis {$40,000, or [($40,000 x 25%) = $10,000 + ($1.2 million x 2.5%) = $30,000]}. The greater of the two limitations is $40,000. Because this $40,000 is less than Patricia's tentative $50,000 QBI, the lower amount must be used. Patricia's QBI for this trade or business, then, is $40,000.
-Dan receives a proportionate current (nonliquidating) distribution when the basis of his partnership interest is $30,000. The distribution consists of $10,000 in cash and property with an adjusted basis to the partnership of $24,000 and a fair market value of $26,500. Dan's basis in the noncash property is:

• A) $26,500.
• B) $24,000.
• C) $20,000.
• D) $10,000.
• E) $0.

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