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newbie6
New Member

Do capital gains taxes impact QBI deduction from S-Corp?

 
2 Replies
Critter-3
Level 15

Do capital gains taxes impact QBI deduction from S-Corp?

No ... the deduction on line 13 of the form 1040  is not affected by the tax rate used on line 16. 

Mike9241
Level 15

Do capital gains taxes impact QBI deduction from S-Corp?

in a way yes and no. capital gains are not eligible for the QBI deduction. 

the tentative QBI deduction is computed based on the S-Corp. there's a second tentative calculation based on 20% of taxable income reduced by net L-T Capital gains and qualified dividends.

the lesser of the 2 tentative calculations is your QBI deduction.

 

in addition, your QBI deduction can be affected by taxable income, marital status, whether the S-Corp is a Specified Service Trade or Business, QBI loss carryover, Passive Activity Loss rules, etc.

 

 

 

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