Assumptions : The taxpayer has no wages paid or investment in depreciable assets (i.e., the floor does
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Assumptions : |
The taxpayer has no wages paid or investment in depreciable assets (i.e., the floor does not apply so the QBI is zero) |
The taxpayer claimed the standard deduction. |
Notes: |
The phase-out of the QBI deduction varies due to filing status. |
Transcribed Image Text:
Pence Company operates a commerical business using the cash method of accounting and the calendar year. Business income minus business expenses other than owners' salaries and benefits is $500,000 Owner compensation is estimated to be $150,000. These items can be varied in the spreadsheet: Assume that the net income minus the entity tax is distributed to the owners. Net business income Owner's compensation Owner's benefits Individual tax rate (flat tax) Entity Comarison $ QBI deduction (if applicable) Taxable income to owners: Tax to owners--flow through (if applicable) Tax to owners-- dividend at 20% (if applicable) FICA tax on salary (if applicable) Self-employment tax (if applicable) Cash remaining $ $ Net income before tax, owners' salary and benefits Owner compensation Owner benefits--Medical insruance and retirement contributions Entity tax 500,000 150,000 40,000 22% Sole S Regular Proprietor Corporation Corporation. $ 500,000 $ 500,000 $500,000 $ 150,000 $150,000 $150,000 $ 40,000 $ 40,000 $40,000 Pence Company operates a commerical business using the cash method of accounting and the calendar year. Business income minus business expenses other than owners' salaries and benefits is $500,000 Owner compensation is estimated to be $150,000. These items can be varied in the spreadsheet: Assume that the net income minus the entity tax is distributed to the owners. Net business income Owner's compensation Owner's benefits Individual tax rate (flat tax) Entity Comarison $ QBI deduction (if applicable) Taxable income to owners: Tax to owners--flow through (if applicable) Tax to owners-- dividend at 20% (if applicable) FICA tax on salary (if applicable) Self-employment tax (if applicable) Cash remaining $ $ Net income before tax, owners' salary and benefits Owner compensation Owner benefits--Medical insruance and retirement contributions Entity tax 500,000 150,000 40,000 22% Sole S Regular Proprietor Corporation Corporation. $ 500,000 $ 500,000 $500,000 $ 150,000 $150,000 $150,000 $ 40,000 $ 40,000 $40,000
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The rate on qualified business income is 20 for joint filers with taxable income below 315000 heads ... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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