Question
X Corporation, a cash basis taxpayer, has taxable income of $500,000 for the current year. Tern elected $25,000 of 179 expense. It also had a
X Corporation, a cash basis taxpayer, has taxable income of $500,000 for the current year. Tern elected $25,000 of 179 expense. It also had a related-party loss of $20,000 and a realized (not recognized) gain from an involuntary conversion of $75,000. It paid Federal income tax of $150,000 and paid a nondeductible fine of $10,000. Terns current E & P is:
| a. | $415,000. |
| b. | $350,000. |
| c. | $340,000. |
| d. | $320,000. |
In 2021, Sam and Betty, each single, both generate sole proprietor income of $240,000. Sams income is generated from a wholesale business whereas Bettys is earned from her law practice. Neither has any employees or qualified assets. Both claim the standard deduction and have other income equal to the standard deduction amount.
| a. | Both Sam and Betty will have a QBI deduction of $48,000. |
| b. | Sam can obtain a QBI deduction, but Betty cannot because of the taxable income level and law practice is a specified service business. |
| c. | Neither Sam nor Betty will generate a QBI deduction due to their taxable income levels. |
| d. | None of these. |
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Information For Decision Making Readings In Cost And Managerial Accounting
Authors: Alfred Rappaport
3rd Edition
0134643542, 978-0134643540
