Your manager, Elva Martinez, comes to you with a tax research issue. One of your firm$$s tax clients, Alexa Means $($single$,$ no children$),$ will be leaving her position in administration for a large insurance company and will become an outside life insurance salesperson for the company on January $1,2025.$ Her current manager told her she will no longer be an employee but, instead, will be what is called a $$statutory employee.$$ Her manager thinks this means she can report her expected gross income of $$160,000$ on Schedule C$,$ even though the income is reported on a Form W$-2.$

Your manager explains that Alexa has no other income and will claim the standard deduction for $2025.$ Also, Alexa was discussing this with her hairdresser who told her about the Qualified Business Income Deduction $($her hairdresser operates as a sole proprietorship and gets the deduction on her tax return$).$ Your manager wants you to prepare a tax research memo explaining the following:

Will Alexa be a statutory employee and does that mean she will report her gross income on Schedule C$?$

Will Alexa get the qualified business income deduction?

Your Responsibilities

Prepare a Tax Research Memorandum to your manager, Elva Martinez, with a copy to the Alexa Means $2025$ Tax File.