Taylor is one of the owners of a firm that generated $76,000 in taxable income last year. They did not have to pay personal tax on their share of the firm's income. Which of the following types of firms is Shawn MOST likely to be a partial owner of? OA. Sole proprietorship. B. Corporation. OC. General partnership. OD. All of the above are possible.
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- T owns a sole proprietorship, and L is the sole shareholder in a C corporation. In the current year, both businesses make a net profit of $60,000. Neither business distributes any funds to the owners in the year. For the current year, T must report $60,000 of income on his individual return, but L is not required to report any income from the corporation on her individual return. Question 1 options: True FalseJacob is a member of WCC (an LLC taxed as a partnership). Jacob was allocated $90,000 of business income from WCC for the year. Jacob's marginal income tax rate is 37 percent. The business allocation is subject to 2.9 percent of self-employment tax and 0.9 percent additional Medicare tax. a. What is the amount of tax Jacob will owe on the income allocation if the income is not qualified business income? b. What is the amount of tax Jacob will owe on the income allocation if the income is qualified business income (QBI) and Jacob qualifies for the full QBI deduction?es Mr. Kelly owns stock in VP and in BL, both of which are S corporations. This year, he had the following income and loss items: Salary Business income from VP Business loss from BL Required: Compute Mr. Kelly's AGI under each of the following assumptions: $ 62,630 19,320 (25,300) a. He materially participates in VP's business but not in BL's business. b. He materially participates in BL's business but not in VP's business. c. He materially participates in both corporate businesses. d. He does not materially participate in either corporate business. a AGI b. AGI C. AGI d. AGI Amount
- For the following independent cases, determine whether economic income is present and, if so, whether it must be included in gross income (i.e., is it realized and recognized for tax purposes?) Asia owns stock that is listed on the New York Stock Exchange, and this year the stock increased in value by 20,000. Ben sold stock for $10,000 and paid a sales commission of $250. Ben purchased the stock several years ago for $4,000. Bessie is partner in SULU Enterprises LLC. This year SULU reported that Bessie’s share of rental income was $2,700 and her share of municipal interest was $750.Which of the following taxpayers may claim a deduction for qualified business income? a. A driver for Uber or Lyft. b. A vetenarian operating as an S corporation. In addition to veterinary services, revenues are also derived from the sale of pet food and supplies and from the boarding of animals. c. A CPA operating as an LLC taxed as a sole proprietorship. The CPA is single and has taxable income of $150,000. d. Same as part(c), except the CPA has taxable income of $200,000 e. A real estate salesperson. f. A pet sitter/ dog walker. g. A sole proprietor software developer. h. An individual wage earner who derives $60,000 of rental income from a duplex she owns.Explain the tax effect based on providing $180,000 per year for the client’s salary and $70,000 per year for his daughter’s salary if they withdraw cash from the business or pay dividends as appropriate. E. Justify the percentage of ownership the client’s daughter should have in the business based on the type of business entity recommended. Consider the tax law in reference to the recommendation and how the decision will affect the daughter’s tax return. Answer for a S-Corporation please
- Rose, Jean and Dorothy have been trading as a partnership for the last three years. However, their accountant advised them to convert to a limited company in order to reduce their tax liability. Following this advice they incorporated a company, Davies Fashions Ltd, with Rose, Jean and Dorothy as the sole directors and shareholders. Required 2. What are the various taxes that would apply to the above case?Catherine is a 100-percent owner of CC LLC (taxed as an S corporation). She works full time for CC and her marginal ordinary tax rate is 37 percent. Which of the following statements is true regarding Catherine's tax treatment of business income allocated to him from CC? Question 7 options: Business income allocations are subject to self-employment tax. Business income allocations are not subject to the net investment income tax. Business income allocations are subject to the additional Medicare tax. Business income allocations are taxed at a maximum 23.8 percent tax rate.4. Marty Byrde is the sole owner of Ozark Co. During the tax year he received both distributions and dividends from the company. What type of entity is Ozark Co. and how would that be possible?
- Allison and Jake formed a partnership. Erin has an income of 100,000 plus 51,377. Allison is single and takes the standard deduction. Allison has long term capital gains of 12,500 and interest income from Allison Bank of 900. Allison also received wages as an employee from a different company of 24,000. Allison has no other sources of income or deduction. Determine: a. The amount of income considered to be earned from self-employment activities b. The amount of self-employment income subject to social security taxation c. The social security tax due related to the self-employment income activities d. The amount of self-employment income subject to medicare taxation e. The medicare tax due related to the self-employment income activitiesYou have a client, and they formed a corporation with 5 of their friends. All of the owners (all six of you) were required to put in $50,000 or assets valued at the same into the company, but only 1 of the owners is going to work full time for the company. Under which tax code does this transaction apply and what are the tax effects to the corporation and to the shareholders, who all contribute (for this transaction specifically)Alan and Melissa are equal partners in a non-corporate business. The business has a gross income of $320,000 and has operating expenses of $210,000. They are both single. Alan also has long-term capital gains of 25,000. Assume that Alan and Melissa have no other income and no itemized deductions. What is the amount of the qualified business deduction for both of them?
