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.

1. 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.
2. 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.
3. 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.

4. 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

5. 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

Answer rating: 100% (QA)

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 the full answer