Answered: Amor and Deon are the only two members…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Amor and Deon are the only two members of is a member of AMD (an LLC taxed as a partnership). Amor was allocated $250,000 of business income from AMD for the year. Amor’s marginal income tax rate is 34 percent. The business allocation is subject to 2.9 percent of self-employment tax and .9 percent additional Medicare tax.

What is the amount of tax Amor will owe on the income allocation if the income is qualified business income?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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QBI deduction is a type of tax deduction that permits taxpayers to deduct 20% of QBI on their taxes.

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