In 2019, Sam and Betty, Each Single, Both Generate Sole

question 25

Multiple Choice

In 2019, Sam and Betty, each single, both generate sole proprietor income of $240,000. Sam's income is generated from a wholesale business whereas Betty's is earned from her law practice. Neither has any employees or qualified assets. Both claim the standard deduction and have other income equal to the standard deduction amount.

• A) Both Sam and Betty will have a QBI deduction of $48,000.
• B) Sam can obtain a QBI deduction, but Betty cannot because of the taxable income level and law practice is a specified service business.
• C) Neither Sam nor Betty will generate a QBI deduction due to their taxable income levels.
• D) None of these.

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Definitions:

Call

An option contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price within a specified time.

Put Option

An agreement that grants the holder the option, without the requirement, to sell a predetermined quantity of a fundamental asset at an agreed-upon price during a defined period.

Forward Contracts

Customized contracts between two parties to buy or sell an asset at a specified price on a future date, used for hedging or speculation.

Futures Contracts

Agreements for the future delivery of assets like commodities or securities at a price fixed upon the contract's signing.