Rachel Is an Accountant Who Practices as a Sole Proprietor

question 53

Essay

Rachel is an accountant who practices as a sole proprietor. This year, Rachel had net business income of $270,000 (net of the deduction for self-employment taxes, the self-employed health insurance deduction, and the deduction for contributions to qualified self-employment retirement plans)from her practice. Assume that Rachel pays $50,000 wages to her employees, she has $20,000 of property (unadjusted basis of equipment she purchased last year),she has no capital gains, and her taxable income before the deduction for qualified business income is $225,000, and she is unmarried. Calculate Rachel's deduction for qualified business income.

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Definitions:

Palatine Bones

A pair of bones located in the back part of the nasal cavity that form part of the hard palate, the nasal cavity, and the eye sockets.

Nasal Cavity

The section of the respiratory tract located behind the nose, involved in breathing and smelling.

Tracheostomy

A surgical procedure to create an opening in the neck leading directly to the trachea (windpipe) to enable breathing.

Tracheotomy

A surgical procedure that involves creating an opening in the neck straight into the trachea to aid breathing.