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.
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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