In: Accounting
1. Which of the following is considered qualified property in the calculation of the deduction for qualified business income (§ 199A)? Please select the correct answer:
a. All business property (both tangible and intangible).
b. Tangible business property subject to depreciation.
c. Tangible property placed in service during the year, but not used in the production of qualified business income.
d. Fully depreciated tangible business property.
2. What happens to the § 199A deduction if a qualified trade or business generates a loss? Please select the correct answer:
a. If the net amount of income, gain, deduction, and loss is less than zero, the net amount of the deduction can be carried back to a previous year or the taxpayer can elect to carry it forward.
b. If the net amount of income, gain, deduction, and loss is less than zero, the net amount of the deduction is lost and is not available to carryforward or carryback.
c. If the net amount of income, gain, deduction, and loss is less than zero, the net amount is treated as a loss in the succeeding year.
d. None of these.
3. Amber is a partner in and sales manager for Architect Partners, a domestic business that is not a specified service trade or business. During the tax year, she receives guaranteed payments of $250,000 from Architect Partners for her services to the partnership as its sales manager. In addition, her distributive share of Architect Partners’ ordinary income (its only item of income or loss) was $175,000. What is Amber’s qualified business income under IRC Section 199A? Please select from the following:
a. $-0-.
b. $175,000.
c. $250,000.
d. $425,000.
e. None of these.
4. Does Corporate Taxpayers get the benefit of deductions under Section 199A? Which of the following taxpayers is eligible for a qualified business income deduction regarding the activity noted? (circle or highlight all that apply)
a. Tom’s Burger Place, a sole proprietorship.
b. A driver for Uber or Lyft.
c. An employee working for Apple, Inc.
d. Apple, Inc.
e. A partner of a CPA firm earning less than $125,000 a year.
Answers
1. b
The term qualified property is generally defined to mean, with respect to any qualified trade or business, tangible property of a character subject to depreciation.
2. c
If the net amount of qualified income, gain, deduction, and loss with respect to qualified trades or businesses of the taxpayer for any taxable year is less than zero, such amount shall be treated as a loss from a qualified trade or business in the succeeding taxable year.
3. b
QBI specifically excludes the following items of income, gain, deduction, or loss: (1) Investment-type income such as dividends, investment interest income, short-term & long-term capital gains, commodities gains, foreign currency gains, and similar items; (2) Any Section 707(c) guaranteed payments paid in compensation for services performed by the partner to the partnership; (3) Section 707(a) payments for services rendered with respect to the trade or business; or (4) Qualified REIT dividends, qualified cooperative dividends, or qualified PTP income.
4. a,b & e