Exercise 11-3 (LO. 6)

In 2020, Henry Jones (Social Security number 123-45-6789) works as a freelance driver, finding customers using various platforms like Uber and Grubhub. He is single and has no other sources of income. In 2020, Henry's qualified business income from driving is $61,200. Assume Henry takes the standard deduction of $12,400.

Click here to access the 2020 individual tax rate schedule to use for this problem.

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Assume the QBI amount is net of the self-employment tax deduction.

a. Compute Henry's QBI deduction and his tax liability for 2020.

QBI deduction: $fill in the blank 02b5fc025fd7ff3_1 Tax liability (round to the nearest dollar): $fill in the blank 02b5fc025fd7ff3_2

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b. Complete Henry's 2020 Form 8995 (Qualified Business Income Deduction Simplified Computation).

Enter all amounts as positive numbers. If an amount is zero, enter "0".

Form 8995 Department of the Treasury Internal Revenue Service	Qualified Business Income Deduction Simplified Computation Attach to your tax return. Go to www.irs.gov/Form8995 for instructions and the latest information.	OMB No. 1545-0123
		2020 Attachment Sequence No. 55

Name(s) shown on return Henry Jones

Your taxpayer identification number 123-45-6789

Note. You can claim the qualified business income deduction only if you have qualified business income from a qualified trade or business, real estate investment trust dividends, publicly traded partnership income, or a domestic production activities deduction passed through from an agricultural or horticultural cooperative. See instructions. Use this form if your taxable income, before your qualified business income deduction, is at or below $163,300 ($326,600 if married filing jointly), and you aren't a patron of an agricultural or horticultural cooperative.

1	(a) Trade, business, or aggregation name	(b) Taxpayer identification number	(c) Qualified business income or (loss)
i	Henry Jones Transportation	123-45-6789	fill in the blank d6d44905bff5fa2_1
ii
iii
iv
v

2	Total qualified business income or (loss). Combine lines 1i through 1v, column (c) . . .	2	fill in the blank d6d44905bff5fa2_2
3	Qualified business net (loss) carryforward from the prior year . . . . . . . . . . . . . . . . .	3	()
4	Total qualified business income. Combine lines 2 and 3. If zero or less, enter -0- . . . .	4	fill in the blank d6d44905bff5fa2_3
5	Qualified business income component. Multiply line 4 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5	fill in the blank d6d44905bff5fa2_4
6	Qualified REIT dividends and publicly traded partnership (PTP) income or (loss) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7	Qualified REIT dividends and qualified PTP (loss) carryforward from the prior year . .	7	()
8	Total qualified REIT dividends and PTP income. Combine lines 6 and 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
9	REIT and PTP component. Multiply line 8 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			9	fill in the blank d6d44905bff5fa2_5
10	Qualified business income deduction before the income limitation. Add lines 5 and 9 . . . . . . . . . . . . . . . . . .			10	fill in the blank d6d44905bff5fa2_6
11	Taxable income before qualified business income deduction . . . . . . . . . . . . . . . . . .	11	fill in the blank d6d44905bff5fa2_7
12	Net capital gain (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
13	Subtract line 12 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . .	13	fill in the blank d6d44905bff5fa2_8
14	Income limitation. Multiply line 13 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			14	fill in the blank d6d44905bff5fa2_9
15	Qualified business income deduction. Enter the lesser of line 10 or line 14. Also enter this amount on the applicable line of your return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			15	fill in the blank d6d44905bff5fa2_10
16	Total qualified business (loss) carryforward. Combine lines 2 and 3. If greater than zero, enter -0- . . . . . . . . .			16	fill in the blank d6d44905bff5fa2_11
17	Total qualified REIT dividends and PTP (loss) carryforward. Combine lines 6 and 7. If greater than zero, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			17	fill in the blank d6d44905bff5fa2_12

For Privacy Act and Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 37806C

Form 8995 (202