Question

BLANK is a member of BCC (an LLC taxed as a partnership). BLANK was allocated $155,000 of business income from BCC for the year. BLANK'S marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax and 0.9 percent additional Medicare tax. (Round your intermediate calculations to the nearest whole dollar amount.)

What is the amount of tax BLANK will owe on the income allocation if the income is qualified business income (QBI) and BLANK qualifies for the full QBI deduction?

tax owed if income is QBI=

b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?

Answer 1

Amount of tax BLANK owe

$60737

		LLC	Description
1.	Pretax earnings	155000
2.	Entity level tax rate	0%
3.	Entity level tax	0
4.	Earnings after-entity-level tax	155000	(1) – (3)
5.	QBI deduction	(31000)	(4) x 20%
6.	Deduction for 50 percent of SE tax	(2076)	(1) × 0.9235 ×0.029 × 0.5
7.	Net income taxable to owner	149455	(4) + (5) + (6)
8.	Income tax paid by owner	55298	(7) × 0.37
9.	Self-employment tax	4151	(1) × 0.9235 × 0.029
10.	Additional Medicare tax/Net investment income tax	1288	(1) × 0.9235 × 0.009 additional Medicare tax
11.	Owner-level tax	$60737	(8) + (9) + (10)