Devon Bishop, age 45, is single He lives at 1507 Rose Lane, Albuquerque, NM 87131 His Social Security number is 111 11 1117 Devon does not want $3 to go to the Presidential Election Campaign Fund Devon's wife, Ariane, passed away in 2014 Devon's son, Tom, who is age 18, resides with Devon Tom's Social Security number is 123 45 6788 Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory the business operates as Devons Copy Shop, 422 E Main Street, Albuquerque, NM 87131, IRS business activity code 453990 His revenues and expenses for 2018 are as follows Sales revenue $740,000 Cost of goods sold (based on purchases for the year) 405,000 Salary expense 88,000 Rent expense 30,000 Utilities 8,000 Telephone 6,500 Advertising 4,000 Bad debts 5,000 Depreciation 21,000 Health insurance 26,000 Accounting and legal fees 7,000 Supplies 1,000 New office equipment ($21,000) Devon chose to use the immediate expense election $18,000 for employees and $8,000 for Devon Other income received by Devon includes the following Dividend income (qualified dividends) Swan, Inc $10,000 Wren, Inc 2,000 Interest income First National Bank 11,000 Second City Bank 2,500 County of Santa Fe, NM bonds 17,000 During the year, Devon and his sole proprietorship were involved in the following property transactions Stock transactions were reported to Devon on Form 1099B basis was not reported to the IRS Sold Blue, Inc stock for $45,000 on March 12, 2018 He had purchased the stock on September 5, 2015, for $50,000 Received an inheritance of $300,000 from his uncle, Henry Devon used $200,000 to purchase Green, Inc stock on May 15, 2018, and invested $100,000 in Gold, Inc stock on May 30, 2018 Received Orange, Inc stock worth $9,500 as a gift from his aunt, Jane, on June 17, 2018 Her adjusted basis for the stock was $5,000 No gift taxes were paid on the transfer Jane had purchased the stock on April 1, 2012 Devon sold the stock on July 1, 2018, for $22,000 On July 15, 2018, Devon sold one half of the Green, Inc stock for $40,000 Devon was notified on August 1, 2018, that Yellow, Inc stock he purchased from a colleague on September 1, 2017, for $52,500 had become worthless Although he understood that investing in Yellow was risky, Devon did not anticipate that the corporation would declare bankruptcy On August 15, 2018, Devon received a parcel of land in Phoenix worth $220,000 in exchange for a parcel of land he owned in Tucson Because the Tucson parcel was worth $245,000, he also received $25,000 cash Devon's adjusted basis for the Tucson parcel was $210,000 He originally purchased it on September 18, 2015 On December 1, 2018, Devon sold the condominium in which he had been living for the past 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and moved into a rented townhouse The sales price was $480,000, selling expenses were $28,500, and repair expenses related to the sale were $9,400 Devon purchased the condominium for $180,000 Devon's potential itemized deductions, exclusive of the aforementioned information, are as follows Medical expenses (before the 7 5 floor) $9,500 Property taxes on residence 5,800 State income taxes 4,000 Charitable contributions 10,000 Mortgage interest on residence (First National Bank) 9,900 Sales taxes paid 5,000 During the year, Devon makes estimated Federal income tax payments of $35,000 Required Compute Devon's lowest net tax payable or refund due for 2018 assuming that he makes any available elections that will reduce the tax If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, B, C, D, and SE and Forms 4562, 8824, 8949 and the Qualified Dividends and Capital Gain Tax Worksheet I just need help computing the QBI deduction Line 9 111 11 1117 Page 2 Form 1040 (2018) Devon Bishop Wages, salaries, tips, etc Attach Form(s) W 2 2a Tax exempt interest 2a 17,000 b Taxable interest 2b 13,500 12,000 3a Attach Form(s) 4a W 2 Also attach Form(s) W 2G and 1099 R if tax 5a was withheld 6 Qualified dividends b Ordinary 3a 12,000 dividends IRAs, pensions, and b Taxable amount 4b annuities Social security benefits 5a b Taxable amount 5b Total income Add lines 1 through 5 Add any amount from Schedule 1, line 22 143,500 169,000 Adjusted gross income If you have no adjustments to income, enter the amount from line 6 otherwise, subtract Schedule 1, line 36, from line 6 151,073 Standard deduction or itemized deductions (from Schedule A) 8 29,900 Qualified business income deduction (see instructions) Taxable income Subtract lines 8 and 9 from line 7 If zero or less, enter Standard Deduction for Single or married filing separately, $12,000 Married filing jointly or 11 Qualifying widow(er), $24,000 Head of 12 household, $18,000 If you checked any box under la Standard deduction, see 14 instructions a Tax (see inst) (check if any from 1 Form(s) 8814 2 Form 4972 b Add any amount from Schedule 2 and check here a Child tax credit credit for other dependents 500 b Add any amount from Schedule 3 and check here 500 Subtract line 12 from line 11 If zero or less, enter O Other taxes Attach Schedule 4 19,845 Total tax Add lines 13 and 14 111 11 1117 Page 2 Form 1040 (2018) Devon Bishop Wages, salaries, tips, etc Attach Form(s) W 2 2a Tax exempt interest 2a 17,000 b Taxable interest 2b 13,500 12,000 3a Attach Form(s) 4a W 2 Also attach Form(s) W 2G and 1099 R if tax 5a was withheld 6 Qualified dividends b Ordinary 3a 12,000 dividends IRAs, pensions, and b Taxable amount 4b annuities Social security benefits 5a b Taxable amount 5b Total income Add lines 1 through 5 Add any amount from Schedule 1, line 22 143,500 169,000 Adjusted gross income If you have no adjustments to income, enter the amount from line 6 otherwise, subtract Schedule 1, line 36, from line 6 151,073 Standard deduction or itemized deductions (from Schedule A) 8 29,900 Qualified business income deduction (see instructions) Taxable income Subtract lines 8 and 9 from line 7 If zero or less, enter Standard Deduction for Single or married filing separately, $12,000 Married filing jointly or 11 Qualifying widow(er), $24,000 Head of 12 household, $18,000 If you checked any box under la Standard deduction, see 14 instructions a Tax (see inst) (check if any from 1 Form(s) 8814 2 Form 4972 b Add any amount from Schedule 2 and check here a Child tax credit credit for other dependents 500 b Add any amount from Schedule 3 and check here 500 Subtract line 12 from line 11 If zero or less, enter O Other taxes Attach Schedule 4 19,845 Total tax Add lines 13 and 14

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Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon does not want

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon does not want $3 to go to the Presidential Election Campaign Fund.

Devon's wife, Ariane, passed away in 2014. Devon's son, Tom, who is age 18, resides with Devon. Tom's Social Security number is 123-45-6788.

Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory; the business operates as Devons Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2018 are as follows.

Sales revenue	$740,000
Cost of goods sold (based on purchases for the year)	405,000
Salary expense	88,000
Rent expense	30,000
Utilities	8,000
Telephone	6,500
Advertising	4,000
Bad debts	5,000
Depreciation*	21,000
Health insurance**	26,000
Accounting and legal fees	7,000
Supplies	1,000

*New office equipment ($21,000); Devon chose to use the immediate expense election.

** $18,000 for employees and $8,000 for Devon.

Other income received by Devon includes the following.

Dividend income (qualified dividends):
Swan, Inc.	$10,000
Wren, Inc.	2,000
Interest income:
First National Bank	11,000
Second City Bank	2,500
County of Santa Fe, NM bonds	17,000

During the year, Devon and his sole proprietorship were involved in the following property transactions. Stock transactions were reported to Devon on Form 1099B; basis was not reported to the IRS.

Sold Blue, Inc. stock for $45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for $50,000.
Received an inheritance of $300,000 from his uncle, Henry. Devon used $200,000 to purchase Green, Inc. stock on May 15, 2018, and invested $100,000 in Gold, Inc. stock on May 30, 2018.
Received Orange, Inc. stock worth $9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was $5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. Devon sold the stock on July 1, 2018, for $22,000.
On July 15, 2018, Devon sold one-half of the Green, Inc. stock for $40,000.
Devon was notified on August 1, 2018, that Yellow, Inc. stock he purchased from a colleague on September 1, 2017, for $52,500 had become worthless. Although he understood that investing in Yellow was risky, Devon did not anticipate that the corporation would declare bankruptcy.
On August 15, 2018, Devon received a parcel of land in Phoenix worth $220,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth $245,000, he also received $25,000 cash. Devon's adjusted basis for the Tucson parcel was $210,000. He originally purchased it on September 18, 2015.
On December 1, 2018, Devon sold the condominium in which he had been living for the past 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and moved into a rented townhouse. The sales price was $480,000, selling expenses were $28,500, and repair expenses related to the sale were $9,400. Devon purchased the condominium for $180,000.

Devon's potential itemized deductions, exclusive of the aforementioned information, are as follows.

Medical expenses (before the 7.5% floor)	$9,500
Property taxes on residence	5,800
State income taxes	4,000
Charitable contributions	10,000
Mortgage interest on residence (First National Bank)	9,900
Sales taxes paid	5,000

During the year, Devon makes estimated Federal income tax payments of $35,000.

Required:

Compute Devon's lowest net tax payable or refund due for 2018 assuming that he makes any available elections that will reduce the tax. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, B, C, D, and SE and Forms 4562, 8824, 8949 and the Qualified Dividends and Capital Gain Tax Worksheet.

I just need help computing the QBI deduction? Line 9

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111-11-1117 Page 2 Form 1040 (2018) . Devon Bishop Wages, salaries, tips, etc. Attach Form(s) W-2. 2a Tax-exempt interest 2a 17,000 b Taxable interest 2b 13,500 12,000 3a Attach Form(s) 4a W-2. Also attach Form(s) W-2G and 1099-R if tax 5a was withheld. 6 Qualified dividends b Ordinary 3a 12,000 dividends IRAs, pensions, and b Taxable amount 4b annuities Social security benefits 5a b Taxable amount 5b Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 143,500 169,000 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6.. 151,073 Standard deduction or itemized deductions (from Schedule A).... . 8 29,900 Qualified business income deduction (see instructions) ........ Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter Standard Deduction for- Single or married filing separately, $12,000 - Married filing jointly or 11 Qualifying widow(er), $24,000 - Head of 12 household, $18,000 - If you checked any box under la Standard deduction, see 14 instructions. a Tax (see inst) (check if any from: 1 Form(s) 8814 2 Form 4972 b Add any amount from Schedule 2 and check here ..... a Child tax credit/credit for other dependents 500 b Add any amount from Schedule 3 and check here .... 500 Subtract line 12 from line 11. If zero or less, enter-O-... Other taxes. Attach Schedule 4............ 19,845 Total tax. Add lines 13 and 14 .......... 111-11-1117 Page 2 Form 1040 (2018) . Devon Bishop Wages, salaries, tips, etc. Attach Form(s) W-2. 2a Tax-exempt interest 2a 17,000 b Taxable interest 2b 13,500 12,000 3a Attach Form(s) 4a W-2. Also attach Form(s) W-2G and 1099-R if tax 5a was withheld. 6 Qualified dividends b Ordinary 3a 12,000 dividends IRAs, pensions, and b Taxable amount 4b annuities Social security benefits 5a b Taxable amount 5b Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 143,500 169,000 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6.. 151,073 Standard deduction or itemized deductions (from Schedule A).... . 8 29,900 Qualified business income deduction (see instructions) ........ Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter Standard Deduction for- Single or married filing separately, $12,000 - Married filing jointly or 11 Qualifying widow(er), $24,000 - Head of 12 household, $18,000 - If you checked any box under la Standard deduction, see 14 instructions. a Tax (see inst) (check if any from: 1 Form(s) 8814 2 Form 4972 b Add any amount from Schedule 2 and check here ..... a Child tax credit/credit for other dependents 500 b Add any amount from Schedule 3 and check here .... 500 Subtract line 12 from line 11. If zero or less, enter-O-... Other taxes. Attach Schedule 4............ 19,845 Total tax. Add lines 13 and 14