Question

בee=mהeSוסא e Which of the following is a true statement about the QBI deduction? A. It cannot come into play for a capital-intensive business B. It cannot come into play for a business that does not pay any W 2wages. C. It cannot be claimed bya service provider such as a doctor, attorney, or CPA. It must be considered in evaluating whether a business should be operated as a pass-through D. entity or as a C corporation.

Answer 1

Answer -

Step - (1) - Information Given -

Which of the following is a true statement about the QBI deduction?

• Option- (A) - It cannot come into play for a capital-intensive business.
• Option- (B) - It cannot come into play for a business that does not pay any W-2 wages.
• Option- (C) - It cannot be claimed by a service provider such as a doctor, attorney, or CPA.
• Option- (D) - It must be considered in evaluating whether a business should be operated as a pass-through entity or as a C corporation.

.

Step - (2) - Analysis and Conclusion -

The 2017 Tax Cuts and Jobs Act includes a new tax deduction for business owners. It’s called the Qualified Business Income (QBI) deduction.

The QBI deduction is for business owners. It can be up to 20% of qualified business income.

It’s for pass-through businesses (sole proprietors, LLC owners, partners, and S corporation owners) but not for C corporations.

Therefore, Option - (D) - It must be considered in evaluating whether a business should be operated as a pass-through entity or as a C corporation, is Correct.