Huy is single, age 40, and operates a sole proprietorship. In 2020, Huy's sole proprietorship generated income of $200,000, and the deductible business expenses totaled $120,000, for a net profit of $80,000. Huy also had other gross income of $40,000. Huy's QBI is $74,348, and his modified taxable income is $101,948. Huy's self-employment tax liability is $11,304. Huy takes the standard deduction as his itemized deductions total only $1,000. What is Huy's 2020 taxable income?
Huy is single, age 40, and operates a sole proprietorship. In 2020, Huy's sole proprietorship generated income of $200,000, and the deductible business expenses totaled $120,000, for a net profit of $80,000. Huy also had other gross income of $40,000. Huy's QBI is $74,348, and his modified taxable income is $101,948. Huy's self-employment tax liability is $11,304. Huy takes the standard deduction as his itemized deductions total only $1,000. What is Huy's 2020 taxable income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Huy is single, age 40, and operates a sole proprietorship.
In 2020, Huy's sole proprietorship generated income of $200,000, and the deductible business expenses totaled $120,000, for a net profit of $80,000. Huy also had other gross income of $40,000. Huy's QBI is $74,348, and his modified taxable income is $101,948.
Huy's self-employment tax liability is $11,304.
Huy takes the standard deduction as his itemized deductions total only $1,000.
What is Huy's 2020 taxable income?
Transcribed Image Text:Which of the following is most accurate?
The QBI deduction is a tax credit, and Huy does not qualify because it only applies to C
corporations
The QBI deduction is taken before calculating AGI, símilar to an adjustment
In addítion to paying federal income tax on his taxable income, Huy must pay self-
employment taxes
The QBI deduction is included in gross income
The QBI deduction is an itemized deduction; Huy would only utilize the QBI deduction if he
doesn't take the standard deduction
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