Danielle Is a Partner in and Sales Manager for DG

question 45

Multiple Choice

Danielle is a partner in and sales manager for DG Partners, a domestic business that is not a specified service trade or business. During the tax year, she receives guaranteed payments of $250,000 from DG Partners for her services to the partnership as its sales manager. In addition, her distributive share of DG Partners' ordinary income (its only item of income or loss) was $175,000. What is Danielle's qualified business income?

• A) $-0-.
• B) $175,000.
• C) $250,000.
• D) $425,000.
• E) None of these.

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Definitions:

Complementary Inputs

Goods or services that are used together in production, where an increase in the use of one leads to an increase in the effectiveness of the other.

Substitution Effect

(1) A change in the quantity demanded of a consumer good that results from a change in its relative expensiveness caused by a change in the good’s own price. (2) The reduction in the quantity demanded of the second of a pair of substitute resources that occurs when the price of the first resource falls and causes firms that employ both resources to switch to using more of the first resource (whose price has fallen) and less of the second resource (whose price has remained the same).

Bilateral Monopoly

A bilateral monopoly occurs when a market consists of only one supplier (monopoly) and one buyer (monopsony), leading to unique negotiations and outcomes concerning prices and quantity.

Monopsonistic Employer

A market situation where a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.