In: Accounting
1.
Ellie (a single taxpayer) is the owner of ABC, LLC.The LLC (a sole proprietorship) reports QBI of $900,000 and is not a "specified services" business.ABC paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $30,000.Ellie's taxable income before the QBI deduction is $740,000 (this is also her modified taxable income).What is Ellie's QBI deduction for 2018?
a. $150,000.
b. $148,000.
c. $75,750.
d. $180,000.
e. None of these choices are correct.
2.
Lemon Corporation incurs the following transactions.
Net income from operations
$110,000
Interest income from saving account
5,000
Long-term capital gain from sale of securities
9,000
Short-term capital loss from sale of securities
4,000
Lemon maintains a valid S election and does not distribute any dividends to its shareholder, Patty. As a result, Patty must recognize (ignore the 20% QBI deduction):
a. Ordinary income of $115,000, long-term capital gain of $9,000, and $4,000 short-term capital loss.
b. Ordinary income of $115,000 and long-term capital gain of $5,000.
c. Capital gain of $120,000.
d. Ordinary income of $120,000.