Eligible taxpayers for the qualified business income deduction must be involved in which of the following business types?

The qualified business income deduction, as outlined in the Tax Cuts and Jobs Act, is specifically designed for certain pass-through business entities. Sole proprietorships certainly qualify because they report their income on the owner’s personal tax return and are taxed at individual rates. This deduction aims to provide tax relief to individuals operating these types of businesses.

C corporations, on the other hand, do not qualify for the deduction. They are taxed separately at the corporate tax rate, which makes them ineligible for the pass-through deduction that benefits individuals earning business income through sole proprietorships, partnerships, or S corporations.

Real estate investment trusts (REITs) are another form of business entity that do not qualify for the deduction in the same way. REITs are structured to operate for the purpose of generating income through real estate investments but are subject to specific tax rules and requirements that prevent them from being eligible.

Therefore, the correct understanding is that the qualified business income deduction is intended primarily for income derived from sole proprietorships or similar pass-through entities, making the option regarding sole proprietorships the appropriate answer.