There Are Three Limitations on the Qualified Business Income Deduction

question 8

True/False

There are three limitations on the qualified business income deduction: an overall limitation (based on modified taxable income), another that applies to high income taxpayers, and a third that applies to certain types of service businesses.

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Definitions:

Compound Financial Instrument

A financial instrument that has both a debt and equity component and may be convertible into shares of the issuing company.

Derivative Financial Instrument

is a financial contract whose value is based on the performance of underlying assets, indices, or interest rates, used for speculation, hedging, or risk management.

Option

A financial instrument that gives the holder the right to buy or sell a certain number of shares or debentures in a company by a specified date at a stipulated price.