Determine Scott and Cindy’s QBI deduction.

Provide the answer to the following questions.  You must show your computations (handwritten, typewritten or on an excel spreadsheet) to receive credit.  Each question is worth 5 points.  Upload you answers to the assignment folder on D2L by the due date.

Problem 1.   Scott and Cindy are married and will file a joint tax return. Scott has a sole proprietorship (not a “specified services” business) that generates qualified business income of $300,000. The proprietorship pays W–2 wages of $40,000 and holds property with an unadjusted basis of $10,000. Laura is employed by a local accounting firm. Their taxable income before the QBI deduction is $386,600 (this is also their modified taxable income). Determine Scott and Cindy’s QBI deduction.

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Problem 2.  Scott Taxpayer is an Attorney who operates his own law firm. As a single-member LLC, Scott reports his firm operations as a sole proprietor. Scott has QBI from his law firm of $450,000, he reports paying W–2 wages of $140,000, and the unadjusted basis of property used in the LLC is $350,000. Scott is married and will file a joint tax return with his spouse.  Their taxable income before the QBI deduction is $425,000, including $20,000 of capital gains.  Determine the taxpayer’s QBI deduction for 2020.

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