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#7 In 2019, Sam and Betty, each single, both generate sole proprietor income of $240,000. Sam's...

#7

In 2019, Sam and Betty, each single, both generate sole proprietor income of $240,000. Sam's income is generated from a wholesale business whereas Betty's is earned from her law practice. Neither has any employees or qualified assets. Both claim the standard deduction and have other income equal to the standard deduction amount.

a.Both Sam and Betty will have a QBI deduction of $48,000.

b.Sam can obtain a QBI deduction, but Betty cannot because of the taxable income level and law practice is a specified service business.

c.Neither Sam nor Betty will generate a QBI deduction due to their taxable income levels.

d.None of these choices are correct.

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Answer #1

c.Neither Sam nor Betty will generate a QBI deduction due to their taxable income levels.

To Generate a QBI deduction the taxable income before QBI deduction Should not be  more than $157,500, Since both have income of 240,000 and have claim the standard deduction and have income equal to the standard deduction amount , both of them do not qualify for QBI deduction

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