Question: Sam and Jill Jackson are married filing a joint return. Sam and Jill are involved in several businesses and have contacted you inquiring about the
Sam and Jill Jackson are married filing a joint return. Sam and Jill are involved in several businesses and have contacted you inquiring about the Section 199A qualified business income (QBI) deduction. They have provided information for their Year 1 business income in the exhibit below.
Sam and Jill do not elect to aggregate any of their qualifying businesses. Their only other income in Year 1 is Jill's salary of $138,000 from her full-time job as an analyst. They will not be itemizing deductions in Year 1 and will use the married filing jointly (MFJ) standard deduction of $24,800.
- Using the information in the exhibits, calculate the amount of Sam and Jill's taxable income before the QBI deduction and enter the amounts in the spreadsheet that corresponds to the data below.
- For each business, identify whether the business is a qualified trade or business (QTB), a specified service trade or business (SSTB), or neither a QTB nor an SSTB in Column A on the spreadsheet.
- Calculate the qualified business income (QBI) deduction for each business, the total Section 199A QBI deduction, and enter the amounts in the spreadsheet. For purposes of this task, ignore any deduction for one-half of self-employment tax. Use positive whole numbers, and if the amount of the deduction is zero, enter a zero. Only fill in numbers in the blue squares.
Sam and Jill Jackson: Year 1 Business Net Income Summary
Bata Tango Partners Paul Co. Inc. Dan Co. LLC DNI Ltd. Ptrshp Blue Jay Total Ptrshp Ltd. Consulting Ownership Jill—15% Sam—25% Sam—25% Sam—25% Sam—5% Jill—100% limited partner general partner shareholder member-manager limited partner sole proprietor Entity form Limited partnership General partnership S corporation Limited liability co. (LLC) Limited partnership Sole proprietorship Type of business Rental real estate Smoothie shop Thrift shop Bike store Restaurant Business consulting Business conducted in the U.S. Yes Yes Yes Yes No Yes Income From Business: Share of ordinary business income $16,000 $52,000 $38,000 $8,000 $6,000 $54,000 $174,000 Salary or guaranteed payment $0 $0 $12,000 $12,000 $0 $0 $24,000 Other Information Provided by Business: Share of W-2 wages paid by $2,000 $20,000 $8,000 $8,000 $3,000 $24,000 $65,000 business Share of unadjusted basis immediately after acquisition (UBIA) of qualified property $73,000 $52,000 $18,000 $52,000 $12,500 $0 $207,500 - Section 199A QBI Deduction Taxable Income
| Filing Status | Taxable Income Before QBI Deduction |
| Single & all other | $162,300-$213,300 |
| Married filing jointly | $326,600-$426,600 |
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Based on the information provided Sam and Jill Jackson have the following Year 1 taxable income before the QBI deduction Jills salary 138000 Net business income 174000 Total 312000 Since they are marr... View full answer
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