In 2023, Wilma Ways sole proprietorship, WW Bookstore, generated $120,000 net profit. In addition, Wilma recognized a
Question:
In 2023, Wilma Way’s sole proprietorship, WW Bookstore, generated $120,000 net profit. In addition, Wilma recognized a $17,000 Section 1231 gain on the sale of business furniture. The business checking account earned $960 interest income.
a. Which of these income items are subject to self-employment tax?
b. Compute Wilma’s 2023 self-employment tax, assuming Wilma has no other earned income.
c. Compute Wilma’s allowable QBI deduction, assuming $43,000 of W-2 wages and $90,000 unadjusted basis of tangible depreciable property. Further assume the overall taxable income limitation on QBI does not apply and Wilma’s overall taxable income is sufficiently high that the W-2 wage limitation applies.
d. Compute the overall impact of the bookstore activity on Wilma’s 2023 taxable income.
Step by Step Answer:
Principles Of Taxation For Business And Investment Planning 2024
ISBN: 9781266838750
27th Edition
Authors: Sally Jones, Shelley Rhoades-Catanach, Sandra Callaghan, Thomas Kubick