do tax memo

Background: Your new client, Ricardo Salazaar ("Salazaar"), is a dentist. His filing status is Married Filing Jointly. His spouse does not work. He owns and operates a dentistry office through an S corporation, Dentistry Gold Inc. ("Dentistry Gold"). He is the sole owner of Dentistry Gold. Last year Salazaar purchased the land and building where he operates the dental practice. His attorney advised him for legal reasons to set up another S corporation to own the real property separate from the dental practice and not in his name and rent the building to Dentistry Gold. The new S corporation, that owns the land and building, is called Gold Land, Inc. ("Gold Land"). Since Dentistry Gold already had a lease agreement for the rental expense the previous tax advisor instructed Salazaar to have Dentistry Gold's business attorney to prepare a lease agreement between Dentistry Gold and Gold Land on the same terms and conditions. Dentistry Gold paid a salary to Salazaar of $140,000 for the 2023 tax year. The net rental income earned by Gold Land is $50,000 for the 2023 tax year. The net ordinary income earned by Dentistry Gold for the 2023 tax year after all expenses is $150,000. Dentistry Gold did not employ anyone else in the business. The unadjusted basis of the assets in Dentistry Gold is $50,000. In addition, Saalazaar and his wife had passive losses of $20,000 for the 2023 tax year and investment income of $30,000. Salazaar's previous tax advisor died on December 15, 2023 and this is how he and his wife became your clients. Normally his tax advisor would tell him how much income tax to withhold from his salary for the paycheck that was paid on December 31 at the end of the year as there were no withholdings during the year. The death of the tax advisor meant that Salazaar had the payroll run so that he paid in $75,000 in federal income tax withholding. He and his wife own their own home outright and their itemized deductions for the 2023 tax year would amount to $12,000. Salazaar remembers his previous tax advisor discussing passive income and passive losses, the Qualifying Business Income ("QBI") deduction and the net investment income tax ("NIIT") but he did not quite remember how it all worked. Salazaar wants to understands the income taxes that he needs to pay for the 2023 tax year. Issues: Salazaar needs advice for the following, and requires primary authorities to support the answer: 1. Can the net rental income that he earns from Gold Land offset his passive losses for the 2023 tax year?

subject to prosecution and considered Academic Dishonesty 2. Is the net rental income that he earns from Gold Land subject to the net investment income tax? 3. What is his QBI deduction, if any for the 2023 tax year? When looking for primary authorities you should consider these authorities (but this is not an exhaustive list): IRC 469 Regs 1.469-2(f) IRC 1411 Regs 1.1411-4(g) IRC 199A Regs 1.199A-1(b)(14) Regs 1.199A-5(c)(2) Schumann, T.C. Memo. 2014-138. Your research should consider the above cited authorities and the associated regulations and other primary authorities that you believe are relevant to the situatio