Question: Noah and Joan Arc live with their family in Dayton, OH. Noahs Social Security number is 434-11-3311. Noah was born on February 22, 1987, and
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, 1987, and Joan was born on July 1, 1988. 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 Shem (Social Security number 598-01-2345), born on March 21, 2015, and a daughter named Nora (Social Security number 554-33-2411), born on December 3, 2018.
2. Joan and Noah brought a folder of tax documents (see Forms W-2 and 1098). 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, 2022 | |||
| Revenue: | |||
| Gross Sales | $150,000.00 | ||
| Less: Sales Returns and Allowances | - | ||
| Net Sales | $150,000.00 | ||
| Cost of Goods Sold: | |||
| Beginning Inventory | $11,000.00 | ||
| Add: Purchases | 66,000.00 | ||
| $77,000.00 | |||
| Less: Ending Inventory | 10,000.00 | ||
| Cost of Goods Sold | 67,000.00 | ||
| Gross Profit (Loss) | $83,000.00 | ||
| Expenses: | |||
| Dues and Subscriptions | - | ||
| Estimated Federal Tax Payments | 4,000.00 | ||
| Estimated State Tax Payments | 3,800.00 | ||
| Insurance | 4,000.00 | ||
| Meals and Entertainment | 1,600.00 | ||
| Miscellaneous | 300.00 | ||
| Payroll Taxes | 4,000.00 | ||
| Professional Fees | 1,800.00 | ||
| Rent | 8,500.00 | ||
| Travel | 1,300.00 | ||
| Utilities | 1,500.00 | ||
| Vehicle Expenses | - | ||
| Wages | 25,000.00 | ||
| Total Expenses | 55,800.00 | ||
| Net Operating Income | $27,200.00 | ||
4. Details of The Arc’s meals and entertainment:
|
5. Travel costs are business related and do not include meals. Miscellaneous expense is a $300 contribution to Re-elect Goldie Wilson, Mayor of Dayton.
6. Noah and Joan paid the following amounts during the year (all by check):
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7. Noah has a long-term capital loss carryover from last year of $1,300.
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 two hours per week on the rental activity. The revenue and expenses for the year are as follows:
|
Rental income includes $1,150 per month for two months under the previous lease (which ended February 28, 2022). The new lease is $1,300 per month for ten months under the new lease but the tenant paid only $900 in May 2022 because the tenant paid $400 for repairs to the apartment, and with the Arc’s permission, reduced May’s rent by $400. The new lease also required the tenant to pay last month’s $1,300 rent in February 2022. The home was acquired for $85,000 in 2006. On May 12, 2022, the Arcs installed new fixtures (7-year recovery period) at a cost of $3,500. They wish to maximize the cost recovery on the new fixtures but make no elections.
9. The Arcs paid Ohio general sales tax of $1,076 during the year.
How do you fill out Form 8995 (QBI) for 2022 with the provided information?
Step by Step Solution
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Step 1 Identify QBI Activities The Qualified Business Income Deduction applies to certain passthrough entities sole proprietorships partnerships S cor... View full answer
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