Question

In: Accounting

1. Ellie (a single taxpayer) is the owner of ABC, LLC.The LLC (a sole proprietorship) reports...

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.

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Expert Solution

ekkarill92 answered 1 year ago
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