Charlotte is a partner in, and sales manager for, CD Partners, a domestic business that is not a "specified services" business. During the tax year, she receives guaranteed payments of $174,200 from CD Partners for her services to the partnership as its sales manager. In addition, her distributive share of CD Partners' ordinary income (its only item of income or loss) was $104,520. What is Charlotte's qualified business income? Feedback: At its most basic level, § 199A permits an individual to deduct 20 percent of the qualified business income generated through a sole proprietorship, a partnership, or an S corporation. Qualified business income (QBI) is defined as the ordinary income less ordinary deductions a taxpayer earns from a “qualified trade or business” conducted in the United States by the taxpayer (e.g., from a sole proprietorship). It also includes the distributive share of these amounts from each partnership or S corporation interest held by the taxpayer.
Exercise 15-16 (Algorithmic) (LO. 3, 4)
Charlotte is a partner in, and sales manager for, CD Partners, a domestic business that is not a "specified services" business. During the tax year, she receives guaranteed payments of $174,200 from CD Partners for her services to the partnership as its sales manager. In addition, her distributive share of CD Partners' ordinary income (its only item of income or loss) was $104,520.
What is Charlotte's qualified business income?
Feedback: At its most basic level, § 199A permits an individual to deduct 20 percent of the qualified business income generated through a sole proprietorship, a partnership, or an S corporation. Qualified business income (QBI) is defined as the ordinary income less ordinary deductions a taxpayer earns from a “qualified trade or business” conducted in the United States by the taxpayer (e.g., from a sole proprietorship). It also includes the distributive share of these amounts from each partnership or S corporation interest held by the taxpayer.
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