Reference no: EM132909123

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2019, his business recorded the following items of income and expense:

Revenue from inventory sales $147,000
Cost of goods sold 33,500
Business license tax 2,400
Rent on retail space 42,000
Supplies 15,000
Wages paid to employees 22,000
Payroll taxes 1,700Utilities 3,600

Required:

Problem 1: Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2019 Form 1040.

Problem 2: Compute self-employment tax payable on the earnings of James's sole proprietorship by completing a 2019 Schedule SE, Form 1040.

Problem 3: Assume that James's business is not a service business, and that it has $155,000 unadjusted basis in tangible depreciable property. Calculate James's 2019 QBI deduction, before any overall taxable income limitation.