Rob Wriggle operates a small plumbing supplies business as a sole proprietor. In 2019, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had been held for investment generating a long-term capital gain of $15,000. The business has $300,000 of qualified business property in 2019. Rob's wife, Marie, has wage income of $250,000. They jointly sold stocks in 2019 and generated a long-term capital gain of $13,000. Rob and Marie have no dependents and in 2019, they take the standard deduction of $24,400. The income threshold for QBI limitations starts at $321,400 for married filing jointly taxpayers. a. What is Rob and Marie's taxable income before the QBI deduction? $407,600 b. What is Rob and Marie's QBI? $154,000 c. What is Rob and Marie's QBI deduction? $29,248 complete Form 8995-A to report Rob’s QBI deduction. 2 Qualified business income from the trade, business, or aggregation. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 154000 3 Multiply line 2 by 20% (0.20). If your taxable income is $160,700 or less ($160,725 if married filing separately; $321,400 if married filing jointly), skip lines 4 through 12 and enter the amount from line 3 on line 13 . . . . 3 30800 4 Allocable share of W-2 wages from the trade, business, or aggregation . . . 4 58000 5 Multiply line 4 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 29000 6 Multiply line 4 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 14500 7 Allocable share of the unadjusted basis immediately after acquisition (UBIA) of all qualified property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 300000 8 Multiply line 7 by 2.5% (0.025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 7500 9 Add lines 6 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 22000 10 Enter the greater of line 5 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 29000 11 W-2 wage and qualified property limitation. Enter the smaller of line 3 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 29000 12 Phased-in reduction. Enter amount from line 26, if any. See instructions 12 13 Qualified business income deduction before patron reduction. Enter the greater of line 11 or line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Patron reduction. Enter the amount from Schedule D (Form 8995-A), line 6, if any . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Qualified business income component. Subtract line 14 from line 13 15 16 Total qualified business income component. Add all amounts reported on line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .► 16 17 Enter amounts from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 30800 18 Enter the amounts from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 29000 19 Subtract line 18 from line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 1800 20 Taxable income before qualified business income deduction . . . . . . . . . . . . . . . . . . 20 21 Threshold. Enter $160,700 ($160,725 if married filing separately; $321,400 if married filing jointly) . . . . . . . . . . . . . . . 21 321400 22 Subtract line 21 from line 20 . . . . . . . . . . 22 23 Phase-in range. Enter $50,000 ($100,000 if married filing jointly) . . . . . . . . . . . . . 23 100000 24 Phase-in percentage. Divide line 22 by line 23 . . . . . . . . . . . . . . . . . . . . . . . . 24 25 Total phase-in reduction. Multiply line 19 by line 24 . . . . . . . . . . . . 25 26 Qualified business income after phase-in reduction. Subtract line 25 from line 17. Enter this amount here and on line 12, for the corresponding trade or business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Rob Wriggle operates a small plumbing supplies business as a sole proprietor. In 2019, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had been held for investment generating a long-term capital gain of $15,000. The business has $300,000 of qualified business property in 2019. Rob's wife, Marie, has wage income of $250,000. They jointly sold stocks in 2019 and generated a long-term capital gain of $13,000. Rob and Marie have no dependents and in 2019, they take the standard deduction of $24,400. The income threshold for QBI limitations starts at $321,400 for married filing jointly taxpayers. a. What is Rob and Marie's taxable income before the QBI deduction? $407,600 b. What is Rob and Marie's QBI? $154,000 c. What is Rob and Marie's QBI deduction? $29,248 complete Form 8995-A to report Rob’s QBI deduction. 2 Qualified business income from the trade, business, or aggregation. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 154000 3 Multiply line 2 by 20% (0.20). If your taxable income is $160,700 or less ($160,725 if married filing separately; $321,400 if married filing jointly), skip lines 4 through 12 and enter the amount from line 3 on line 13 . . . . 3 30800 4 Allocable share of W-2 wages from the trade, business, or aggregation . . . 4 58000 5 Multiply line 4 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 29000 6 Multiply line 4 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 14500 7 Allocable share of the unadjusted basis immediately after acquisition (UBIA) of all qualified property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 300000 8 Multiply line 7 by 2.5% (0.025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 7500 9 Add lines 6 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 22000 10 Enter the greater of line 5 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 29000 11 W-2 wage and qualified property limitation. Enter the smaller of line 3 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 29000 12 Phased-in reduction. Enter amount from line 26, if any. See instructions 12 13 Qualified business income deduction before patron reduction. Enter the greater of line 11 or line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Patron reduction. Enter the amount from Schedule D (Form 8995-A), line 6, if any . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Qualified business income component. Subtract line 14 from line 13 15 16 Total qualified business income component. Add all amounts reported on line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .► 16 17 Enter amounts from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 30800 18 Enter the amounts from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 29000 19 Subtract line 18 from line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 1800 20 Taxable income before qualified business income deduction . . . . . . . . . . . . . . . . . . 20 21 Threshold. Enter $160,700 ($160,725 if married filing separately; $321,400 if married filing jointly) . . . . . . . . . . . . . . . 21 321400 22 Subtract line 21 from line 20 . . . . . . . . . . 22 23 Phase-in range. Enter $50,000 ($100,000 if married filing jointly) . . . . . . . . . . . . . 23 100000 24 Phase-in percentage. Divide line 22 by line 23 . . . . . . . . . . . . . . . . . . . . . . . . 24 25 Total phase-in reduction. Multiply line 19 by line 24 . . . . . . . . . . . . 25 26 Qualified business income after phase-in reduction. Subtract line 25 from line 17. Enter this amount here and on line 12, for the corresponding trade or business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 84TA
Related questions
Question
Rob Wriggle operates a small plumbing supplies business as a sole proprietor. In 2019, the plumbing business has gross business income of $421,000 and business expenses of $267,000, including wages paid of $58,000. The business sold some land that had been held for investment generating a long-term
The income threshold for QBI limitations starts at $321,400 for married filing jointly taxpayers.
a. What is Rob and Marie's taxable income before the QBI deduction?
$407,600
b. What is Rob and Marie's QBI?
$154,000
c. What is Rob and Marie's QBI deduction?
$29,248
complete Form 8995-A to report Rob’s QBI deduction.
| 2 | Qualified business income from the trade, business, or aggregation. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 2 | 154000 | ||
| 3 | Multiply line 2 by 20% (0.20). If your taxable income is $160,700 or less ($160,725 if married filing separately; $321,400 if married filing jointly), skip lines 4 through 12 and enter the amount from line 3 on line 13 . . . . | 3 | 30800 | ||
| 4 | Allocable share of W-2 wages from the trade, business, or aggregation . . . | 4 | 58000 | ||
| 5 | Multiply line 4 by 50% (0.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 5 | 29000 | ||
| 6 | Multiply line 4 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 6 | 14500 | ||
| 7 | Allocable share of the unadjusted basis immediately after acquisition (UBIA) of all qualified property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 7 | 300000 | ||
| 8 | Multiply line 7 by 2.5% (0.025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 8 | 7500 | ||
| 9 | Add lines 6 and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 9 | 22000 | ||
| 10 | Enter the greater of line 5 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . | 10 | 29000 | ||
| 11 | W-2 wage and qualified property limitation. Enter the smaller of line 3 or line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 11 | 29000 | ||
| 12 | Phased-in reduction. Enter amount from line 26, if any. See instructions | 12 | |||
| 13 | Qualified business income deduction before patron reduction. Enter the greater of line 11 or line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 13 | |||
| 14 | Patron reduction. Enter the amount from Schedule D (Form 8995-A), line 6, if any . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 14 | |||
| 15 | Qualified business income component. Subtract line 14 from line 13 | 15 | |||
| 16 | Total qualified business income component. Add all amounts reported on line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .► | 16 |
| 17 | Enter amounts from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 17 | 30800 | |||||
| 18 | Enter the amounts from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18 | 29000 | |||||
| 19 | Subtract line 18 from line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 19 | 1800 | |||||
| 20 | Taxable income before qualified business income deduction . . . . . . . . . . . . . . . . . . | 20 | ||||||
| 21 | Threshold. Enter $160,700 ($160,725 if married filing separately; $321,400 if married filing jointly) . . . . . . . . . . . . . . . | 21 | 321400 | |||||
| 22 | Subtract line 21 from line 20 . . . . . . . . . . | 22 | ||||||
| 23 | Phase-in range. Enter $50,000 ($100,000 if married filing jointly) . . . . . . . . . . . . . | 23 | 100000 | |||||
| 24 | Phase-in percentage. Divide line 22 by line 23 . . . . . . . . . . . . . . . . . . . . . . . . |
24 | ||||||
| 25 | Total phase-in reduction. Multiply line 19 by line 24 . . . . . . . . . . . . | 25 | ||||||
| 26 | Qualified business income after phase-in reduction. Subtract line 25 from line 17. Enter this amount here and on line 12, for the corresponding trade or business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 26 |
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ISBN:
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Author:
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Publisher:
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