George Operates a Business That Generated Adjusted Gross Income of $250,000

question 19

Multiple Choice

George operates a business that generated adjusted gross income of $250,000 and taxable income of $170,000 this year (before the domestic production activities deduction) .Included in income was $70,000 of qualified production activities income.George paid $60,000 of wages to employees engaged in domestic manufacturing.What domestic production activities deduction will George be eligible to claim this year?

• A) $5,400.
• B) $6,300.
• C) $7,200.
• D) $15,300.
• E) $22,500.

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of running a business, excluding capital expenditures.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged goods, and discounts.

Assets

Resources owned or controlled by a business, expected to produce future economic benefits.

Profit Margin

A financial metric that measures the percentage of revenue remaining after all expenses have been deducted from sales.