PROBLEMS1. Andy is an electrician who generates $140,000 in gross income from hissole proprietorship. He incurs $20,000 of expenses in connection with hisbusiness. Additionally, Andy earns $2,000 in interest and $3,000 of dividendincome during the year from outside investments. Assume Andy is single,claims a standard deduction of $12,000, and has no other tax items for theyear.(a) Does Andy qualify to take the § 199A deduction and, if so,determine the amount of his deduction.(b) What result if Andy does not operate a sole proprietorship, butinstead earns $120,000 of compensation income by performingelectrical services as an employee of a general contractingcompany.(c) Assume the same facts as in (a), above, except that, instead ofoperating a sole proprietorship, Andy is a 50% owner of anLLC that provides electrical services. The LLC generates$280,000 of revenue and incurs $40,000 of deductibleexpenses, and allocates all of its profits and losses equallybetween the two owners.

To address these problems, we have to consider the conditions for the § 199A deduction and calculate…

Answered: PROBLEMS 1. Andy is an electrician who…

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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