Assume Stuart chooses to form SMG as an S-corporation.
•SMG’s taxable income is $650,000 and all of the income is business income.
•His marginal ordinary tax rate is 37%.
•Stuart is eligible for the full deduction for qualified business income on the flow-through income from SMG.
•The income is not passive income
What is the overall tax and tax rate on SMG’s business income?
Assume Stuart chooses to form SMG as an S-corporation.
•SMG’s taxable income is $650,000 and all of the income is business income.
•His marginal ordinary tax rate is 37%.
•Stuart is eligible for the full deduction for qualified business income on the flow-through income from SMG.
•The income is not passive income
What is the overall tax and tax rate on SMG’s business income?
Assume Stuart chooses to form SMG as an S-corporation.
•SMG’s taxable income is $650,000 and all of the income is business income.
•His marginal ordinary tax rate is 37%.
•Stuart is eligible for the full deduction for qualified business income on the flow-through income from SMG.
•The income is not passive income
What is the overall tax and tax rate on SMG’s business income?
Assume Stuart chooses to form SMG as an S-corporation.
•SMG’s taxable income is $650,000 and all of the income is business income.
•His marginal ordinary tax rate is 37%.
•Stuart is eligible for the full deduction for qualified business income on the flow-through income from SMG.
•The income is not passive income
What is the overall tax and tax rate on SMG’s business income?
Assume Stuart chooses to form SMG as an S-corporation.
•SMG’s taxable income is $650,000 and all of the income is business income.
•His marginal ordinary tax rate is 37%.
•Stuart is eligible for the full deduction for qualified business income on the flow-through income from SMG.
•The income is not passive income
What is the overall tax and tax rate on SMG’s business income?
Calculation of overall tax of SMG (S Corporation) :
=( taxable income - available deduction for qualified business income) * marginal tax rate
=[ $650,000 - ($650,000 * 0.20)] * 37%
= [$650,000 -$130,000] * 0.37
=$520,000 * 0.37
= $192,400
Note: Section 199A – for tax years beginning after December 31, 2017, the deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income and Stuart is eligible for the full deduction for qualified business Income on the flow - through income from SMG.
Calculation of tax rate on SMG business Income:
= Total tax / Total taxable Income
= $192,400 / $650,000
= 29.6%
Assume Stuart chooses to form SMG as an S-corporation. •SMG’s taxable income is $650,000 and all...
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