Thank you for the response, however it does not fully answer the question. This question applies to a married, filing jointly tax return. Total taxable income (AGI, including spouse W2 income, less solo 401K contribution) significantly exceeds the QBI. If the 20% QBI deduction is applied to the lesser of the QBI or taxable income, shouldn't the deduction be applied to the schedule C net income?
Example: Jack and Jill are filing a joint tax return. Jack is a sole proprietor and has schedule C net income of $50,000. Jack made a $15,000 solo 401K contribution, which reduces AGI as reported on 1040 line 7. Jill has W2 income of $100,000. Total taxable income is $135,000 (Schedule C - solo 401K + W2). Shouldn't the QBI deduction be $10,000 (20% x $50,000 schedule C net income [since it is less than $135,000 taxable income])?
