Rachel Is an Engineer Who Practices as a Sole Proprietor

question 107

Essay

Rachel is an engineer who practices as a sole proprietor. This year, Rachel had net business income of $500,000 (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 business. Assume that Rachel pays $20,000 wages to her employees, she has $500,000 of property (unadjusted basis of equipment she purchased last year), she has no capital gains, her taxable income before the deduction for qualified business income is $380,000, and she is unmarried. Calculate Rachel's deduction for qualified business income.

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Definitions:

Kinesthesis

The sense that detects bodily position, weight, or movement of the muscles, tendons, and joints.

Sensory Information

Data received by the senses which then can be processed by the brain to inform about the environment.

Joints

Joints are the locations where two or more bones meet, allowing for movement and flexibility.

Organ of Corti

A structure located on the basilar membrane in the cochlea of the inner ear, responsible for detecting sound vibrations.