Income Tax Fundamentals 2020
Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
Question
Book Icon
Chapter 4, Problem 15P
To determine

Introduction: The Qualified Business Income QBI deduction is a deduction given to individual taxpayers reporting business income as a sole trader, partnership, limited liability company or S corporation. The QBI deduction was introduced in 2018. It does not require any additional investment but is simply granted as a function of legislative grace.

The QBI deduction for S.

Blurred answer
Students have asked these similar questions
Susan, a single taxpayer, owns and operates a bakery (as a sole proprietorship). The business is not a “specified services” business. In 2020, the business pays $100,000 in W–2 wages, has $150,000 of qualified property, and has $350,000 in net income (all of which is qualified business income). Susan has no other items of income or loss and will take the standard deduction. Susan’s business reports net income of $150,000 (all of which is qualified business income). What is Susan’s QBI deduction?
Kendra is a self-employed taxpayer working exclusively from her home office. Before the home office deduction, Kendra has $6,000 of net income. Her allocable home expenses are $10,000 in total. How are the home office expenses treated on her current year tax return? a.Only $3,000 a year of the home office expenses may be deducted. b.All home office expenses may be deducted, resulting in a business loss of $4,000. c.Only $6,000 of home office expenses may be deducted, resulting in a net business income of zero. None of the remaining $4,000 of home office expenses may be carried forward or deducted. d.Only $6,000 home office expenses may be deducted, resulting in net business income of zero. The remaining $4,000 of home office expenses may be carried forward and deducted in a future year against business income.
Tammy, a single taxpayer, has a part-time job at BigCo, a company in which she has no ownership interest. In addition, she owns and operates LittleCo, a sole proprietorship that is a qualified trade or business. Tammy is paid wages of $40,000 by BigCo and has $100,000 in qualified business income from LittleCo. She has no other items of income or loss and $25,000 of itemized deductions. Assume the QBI amount is net of the self-employment tax deduction. What is her qualified business income deduction for 2020?
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Income Tax Fundamentals 2020
Accounting
ISBN:9780357391129
Author:WHITTENBURG
Publisher:Cengage
Text book image
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:9780357110362
Author:Murphy
Publisher:CENGAGE L
Text book image
SWFT Comprehensive Volume 2019
Accounting
ISBN:9780357233306
Author:Maloney
Publisher:Cengage