Noah and Joan Arc's Tax Return for 2019

I have a question on completing the child tax credit and QBI forms for my assignment. The assignment:

Comprehensive Problem 1 - Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B.

Noah and Joan Arc's Tax Return

Note: This problem is divided into three parts. You will need to complete some of the forms in the other parts in order to determine the amounts to be used on Form 1040. Some of the data information will be reproduced in the other parts for convenience.

Update:The final QBI deduction Regulations indicate that the SE tax deduction is to be incorporated into the computation of QBI.

Noah and Joan Arc live with their family in Dayton, OH. Noah's Social Security number is 434-11-3311. Noah was born on February 22, 1984, and Joan was born on July 1, 1985. Both enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city of Dayton.

1. The Arcs have two children, a son named Billie Bob (Social Security number 598-01-2345), born on March 21, 2012, and a daughter named Mary Sue (Social Security number 554-33-2411), born on December 3, 2015. They received a statement from Roundup Day Care Center (located on a separate tab) regarding the cost of child careprovided for Mary Sue.

2. Joan and Noah brought a folder of tax documents (seeForms W-2and1098). In addition, they received a Substitute 1099 Statement from Charlotte Squab Financial Services (located on a separate tab) regarding their stock transactions for the year.

3. Noah's pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is ''The Arc,'' and its taxpayer identification number is 95-9876556. Since you handle Noah's bookkeeping, you have printed the income statement from your Quickbooks software, shown in the table below:

The Arc

95-9876556

Income Statement

For the Year Ended December 31, 2019Revenue:Gross Sales$143,245.00Less: Sales Returns and Allowances0.00Net Sales$143,245.00Cost of Goods Sold:Beginning Inventory$10,204.00Add: Purchases62,111.00$72,315.00Less: Ending Inventory9,987.00Cost of Goods Sold62,328.00Gross Profit (Loss)$80,917.00Expenses:Dues and Subscriptions$0.00Estimated Federal Tax Payments8,000.00Estimated State Tax Payments4,000.00Insurance780.00Meals and Entertainment1,338.00Miscellaneous0.00Payroll Taxes3,840.00Professional Fees1,700.00Rent8,400.00Travel1,231.00Utilities1,254.00Vehicle Expenses0.00Wages25,113.00Total Expenses55,656.00Net Operating Income$25,261.00

4. Detail of The Arc's meals and entertainment:

$400Meals associated with business travel60Overtime meals for employees878Sports tickets for entertaining large customers$1,338

5. Travel costs are business related and do not include meals.

6. Noah and Joan paid the following amounts during the year (all by check):

Political contributions$250Church donations (for which a written

acknowledgment was received)5,025Real estate taxes on their home2,375Medical co-pays for doctor visits700Mortgage interest for purchase of home (See Form 1098)Tax return preparation fees350Credit card interest220Automobile insurance premiums600Uniforms for Joan125Contribution to Noah's individual retirement account (made on April 1, 2020)6,000

7. Noah has a long-term capital loss carryover from last year of $2,400.

8. Noah and Joan own a condo and use it as a rental property. The condo is located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. Noah provides the management services for the rental including selection of tenants, maintenance, repairs, rent collection, and other services as needed. On average, Noah spends about 2 hours per week on the rental activity. It was rented for 365 days. The revenue and expenses for the year are as follows:

Rental income$13,800Insurance575Interest expense6,870Property taxes1,016Miscellaneous expenses700

The home was acquired for $85,000 in 2003. No improvements have been made to the property.

9. The Arcs paid Ohio general sales tax of $976 during the year.

Required:

You are to prepare the Arc's federal income tax return in good form. You are not to complete an Ohio state income tax return. The following forms and schedules are required and may be found in parts 1, 2, or 3:

Part 1Part 2Part 3Form 1040Schedule CForm 2441

(Only page 1 is required)Schedule 1Schedule DSchedule ESchedule 2Schedule SE

(Only page 1 is required)Form 4562Schedule 3Form 8949Schedule 8812Schedule AQualified Dividends and Capital

Gain Tax WorksheetForm 8995Schedule BChild Tax Credit WorksheetAdditional Instructions:

• Click here to access thetax tableto use for this problem.
• Neither taxpayer wants to make a contribution to the presidential election campaign.
• The taxpayers elect to use the foreign tax credit in lieu of the deduction.
• Enter all amounts as positive numbers, except for a "loss." If required, enter a "loss" as a negative number on the tax form.
• If an amount box does not require an entry or the answer is zero, enter "0".
• If required, round your answers to the nearest dollar. On Schedule SE, use the rounded amounts in subsequent computations.
• Make realistic assumptions about any missing data that you may need.

I do not know how to begin to solve for QBI?