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Rudik [331]
2 years ago
6

Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single-member LLC

(a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $386,600 (this is also their taxable income before the deduction for qualified business income). Determine their allowable QBI deduction for 2020. $fill in the blank 1
Business
1 answer:
AURORKA [14]2 years ago
4 0

Answer:

A. $8,000

B. $14,400

Explanation:

A. Calculation to determine their tentative QBI based on the W-2 Wages/Capital Investment Limit

First step is to calculate the Applicable Percentage

Applicable percentage= 100%-($386,600 - $326,600)/100,000

Applicable percentage=40%

Now let Calculate the tentative QBI based on the W-2 Wages/Capital Investment Limit

GREATER OF BELOW:

Tentative QBI based on the W-2 Wages/Capital Investment Limit=50% of W-2 wages ($40,000 × 50% × 40%)

Tentative QBI based on the W-2 Wages/Capital Investment Limit=$8,000

OR

Tentative QBI based on the W-2 Wages/Capital Investment Limit=[ W-2 wages of ($40,000 × 25% × 40%)]+ [Unadjusted basis of qualified property of ($0 × 2.5% × 40%)]

Tentative QBI based on the W-2 Wages/Capital Investment Limit=$4,000+$0

Tentative QBI based on the W-2 Wages/Capital Investment Limit=$4,000

Therefore their tentative QBI based on the W-2 Wages/Capital Investment Limit will be $8,000

2. Calculation to Determine their allowable QBI deduction for 2020

First step is to calculate the General QBI deduction

General QBI deduction [($300,000 × 20%)× 40%]

General QBI deduction=$24,000

Second step is to calculate the Reduction Ratio

Reduction ratio= ($386,600 - $326,600)/100,000

Reduction ratio=$60,000/100,000

Reduction ratio= 60%

Now let calculate the allowable QBI deduction for 2020

General QBI deduction $24,000

Less Reduction of W-2 Wages/Capital Investment Limit ($9,600)

[($24,000-$8,000)*60%]

2020 Allowable QBI deduction $14,400

($24,000-$9,600)

Therefore their allowable QBI deduction for 2020 will be $14,400

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Answer:

d. where price is equal to average fixed cost.

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If you cannot separate communication from leadership, why is communication known to be one of the top weaknesses in business lea
aksik [14]

The correct answer to this open question is the following.

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4 0
2 years ago
If Roten Rooters, Inc., has an equity multiplier of 1.52, total asset turnover of 1.20, and a profit margin of 6.2 percent, what
Katarina [22]

Answer:

11.30%

Explanation:

Roten rooters have an equity multiplier of 1.52

The total assets turnover is 1.20

The profit margin is 6.2%

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Therefore the ROE can be calculated as follows

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7 0
3 years ago
Read 2 more answers
Jenkins Inc., prepared its financial statement for 2008 based on the information given here. The company had cash worth $1,234,
marishachu [46]

Answer:

$18,334

Explanation:

Given the following :

Cash worth = $1,234

Inventory worth = $13,480

Accounts receivable worth = $7,789

Net fixed asset = $42,331

Other assets = $1,822

Accounts payables = $9,558

Notes payables = $2,756

common stock = $22,000

Retained earnings = $14,008

Long term debt :

Total asset - current liability - stockholders equity

Total asset =current asset + net fixed asset + other asset

Current asset = cash worth + inventory worth + accounts receivables

Current asset = $(1234 + 13480 + 7789) = $22503

Total asset = $(22503 + 42331 + 1822) = $66656

Current liabilities = Accounts payables + notes payables

Current liabilities = $(9558 + 2756) = $12314

Stockholders equity = $(22,000 + 14,008) = $36,008

Long term debt :

Total asset - current liability - stockholders equity

$(66656 - 12314 - 36008) = $18,334

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Natasha_Volkova [10]

Answer:

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