Becker CPA Review 2-3
Which of the following statements is true regarding taxpayers with taxable income below the taxable income limitations for the qualifying business income (QBI) deduction?
a.QBI deduction is only allowed if a qualified trade or business (QTB).
b.QBI deduction is a phased-out deduction if a specified service trade or business (SSTB).
c.QBI deduction is limited to 50 percent of W–2 wages.
d.A qualified trade or business (QTB) and specified trade or business (SSTB) are treated the same.
Answer
Option (d) is correct
Reason
The SSTB exception doesn't apply for taxpayer with taxable income below the threshold amount and is phased in for taxpayer with taxable income above the threshold amount. Therefore QBI and SSTB are treated the same.
Explanation for incorrect answers
Option (a) is incorrect because QBI is not limited to qualified Trade or business it also applies to specified trade or business subject to limitation.
Option (b) is incorrect because QBI deduction is phased out if a specified service trade or business exceed the range set for phased in range since the taxable income is below taxable income limitation therefore QBI is not phased out.
Option( c )is incorrect because for taxpayer with income below the taxable income limitation there is no limit on wages.
Becker CPA Review 2-3 Which of the following statements is true regarding taxpayers with taxable income...
Becker CPA Review 2-5 Which of the following is the overall limitation to the qualifying business income (QBI) deduction? a.Lesser of: 50 percent of combined QBI or 20 percent of the taxpayer’s taxable income in excess of net capital gain b.Lesser of: combined QBI or 20 percent of the taxpayer’s taxable income in excess of net capital gain c.Lesser of: 50 percent of W–2 wages or 25 percent of W–2 wages plus 2.5 percent of the unadjusted basis of qualified...
Becker CPA Review 2-7 Calculate the taxpayer's 2019 qualifying business income deduction for a qualified trade or business: Filing status: Single Taxable income: $180,000 Net capital gains: $0 Qualified business income (QBI): $80,000 W–2 wages: $20,000 a.$16,000 b.$10,000 c.$2,700 d.$13,684
Becker CPA Review 2-1 Which of the following is considered a specified service trade or business (SSTB) for purposes of the qualifying business income deduction? a.Accounting firm b.Manufacturing company c.Engineering firm d.Architectural services
Becker CPA Review 2-2 What is the basic deduction calculation for the qualifying business income deduction? a.30% × Qualifying business income (QBI) b.20% × W–2 wages c.20% × Qualifying business income (QBI) d.30% × W–2 wages
Which of the following statements is true regarding the deduction for qualified business income (QBI)? A. The deduction changes the calculation of self-employment tax. B. Taxable income is reduced below zero by the deduction. C. The deduction is not limited by income or service trade or business. D. A sole proprietor may be able to deduct up to 20% of QBI.
Thad, a single taxpayer, has taxable income before the QBI deduction of $190,700. Thad, a CPA, operates an accounting practice as a single-member LLC (which he reports as a sole proprietorship). During 2019, his proprietorship generates a qualified business income of $150,000, W–2 wages of $125,000, and $10,000 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. What is Thad's qualified business income deduction?
Thad, a single taxpayer, has taxable income before the QBI deduction of $189,500. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2020, his proprietorship generates qualified business income of $151,600, W–2 wages of $113,700, and $10,800 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. If required, round any division to two decimal places. Round your final answer to the nearest dollar. What...
Thad, a single taxpayer, reports taxable income before the QBI deduction of $185,000. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During the tax year, his proprietorship generates qualified business income of $148,000 after deducting self-employment taxes, W–2 wages of $111,000, and $11,600 of qualified property. Assume the QBI amount is net of the self-employment tax deduction. What is Thad's QBI deduction? Please provide solution and answer
Thad, a single taxpayer, has taxable income before the QBI deduction of $197,000. Thad, a CPA, operates an accounting practice as a single member LLC (which he reports as a sole proprietorship). During 2020, his proprietorship generates qualified business income of $157,600, W–2 wages of $118,200, and $8,400 of qualified property.
Greg is a single taxpayer with taxable income of $218,000. Although he is not involved in a specified service trade or business, he has qualified business income. How will Greg compute his business income deduction? He will multiply the amount of his qualified business income by 20%. He will multiply the amount of his taxable income by 20%. His computation will involve several steps because his deduction may be limited by the amount of Form W-2 wages paid and the...