Determine John and Maria qualified business income deduction

Reference no: EM132719936

Questions -

Q1. John and Maria are a married couple. In 2020, Maria worked as an employee at Acme Corporation and John had a retail store which he operated as a sole proprietorship. In 2020, the sole proprietorship had $450,000 of qualified business income. John and Maria had taxable income of $600,000 before considering any qualified business income deduction. John and Maria take the standard deduction of $24,800.

Assume John's sole proprietorship paid w-2 wages of $200,000 and had depreciable assets with an unadjusted basis of $800,000.

a. Determine John and Maria's qualified business income deduction, if any, for 2020. Make sure to show your calculations.

b. Determine John and Maria's taxable income after taking into account all deductions.

Reference no: EM132719936

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