QBI Deduction Optimization

§ 199A. Qualified business income(a) Allowance of deductionIn the case of a taxpayer other than a corporation, except as provided in subsection (i), there shall be allowed as a deduction for any taxable year an amount equal to the lesser of—(1) the combined qualified business income amount of the taxpayer, or (2) an amount equal to 20 percent of the excess (if any) of—(A) the taxable income of the taxpayer for the taxable year, over (B) the net capital gain (as defined in section 1(h)) of the taxpayer for such taxable year. (b) Combined qualified business income amountFor purposes of this section—(1) In generalThe term “combined qualified business income amount” means, with respect to any taxable year, an amount equal to—(A) the sum of the amounts determined under paragraph (2) for each qualified trade or business carried on by the taxpayer, plus (B) 20 percent of the aggregate amount of the qualified REIT dividends and qualified publicly traded partnership income of the taxpayer for the taxable year. (2) Determination of deductible amount for each trade or businessThe amount determined under this paragraph with respect to any qualified trade or business is the lesser of—(A) 20 percent of the taxpayer’s qualified business income with respect to the qualified trade or business, or (B) the greater of—(i) 50 percent of the W–2 wages with respect to the qualified trade or business, or (ii) the sum of 25 percent of the W–2 wages with respect to the qualified trade or business, plus 2.5 percent of the unadjusted basis immediately after acquisition of all qualified property. (3) Modifications to limit based on taxable income(A) Exception from limitIn the case of any taxpayer whose taxable income for the taxable year does not exceed the threshold amount, paragraph (2) shall be applied without regard to subparagraph (B). (B) Phase-in of limit for certain taxpayers(i) In generalIf—(I) the taxable income of a taxpayer for any taxable year exceeds the threshold amount, but does not exceed the sum of the threshold amount plus $75,000 ($150,000 in the case of a joint return), and (II) the amount determined under paragraph (2)(B) (determined without regard to this subparagraph) with respect to any qualified trade or business carried on by the taxpayer is less than the amount determined under paragraph (2)(A) with respect such trade or business,  then paragraph (2) shall be applied with respect to such trade or business without regard to subparagraph (B) thereof and by reducing the amount determined under subparagraph (A) thereof by the amount determined under clause (ii). (ii) Amount of reductionThe amount determined under this subparagraph is the amount which bears the same ratio to the excess amount as—(I) the amount by which the taxpayer’s taxable income for the taxable year exceeds the threshold amount, bears to (II) $75,000 ($150,000 in the case of a joint return).