Homework Answers
solution:
Option c : $ 225,000 is the correct answer
Qualified business income is the net amount of qualified amounts of income from any qualified business including income from S corporation, partnerships, sole proprietorship etc. However, qualified business income does not include investment items like capital gains or losses or dividends and reasonable compensation.
Alicia's Qualified business income from ABC,Inc is $ 225,000
Net Income reported to Alicia as ordinary income = $ 325,000
Less: Dividends which would be reclassified as compensation under section 199A = ($100,000)
Qualified Business Income = $ 225,000
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