Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single member LLC (a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $386,600 (this is also their taxable income before the deduction for qualified business income). Determine their QBI deduction for 2020.
Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single member LLC (a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $386,600 (this is also their taxable income before the deduction for qualified business income). Determine their QBI deduction for 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ben and Molly are married and will file jointly. Ben generates $300,000 of qualified business income from his single member LLC (a law firm). He reports his business as a sole proprietorship. Wages paid by the law firm amount to $40,000; the law firm has no significant property. Molly is employed as a tax manager by a local CPA firm. Their modified taxable income is $386,600 (this is also their taxable income before the deduction for qualified business income).
Determine their QBI deduction for 2020.
Expert Solution
Step 1
For year 2020 since the total taxable income of both the individuals exceeds the joint filing status of $329,800. So, they will be entitled for 20% deduction.
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