Certain Taxpayers Are Eligible for a Deduction for Qualified Business

question 88

Multiple Choice

Certain taxpayers are eligible for a deduction for Qualified Business Income (QBI) . Which of the following taxpayers are eligible for the QBI deduction?
I.A single taxpayer with taxable income of $100,000 who owns 100% of the stock of a regular corporation that manufactures rustic furniture.
II.A single taxpayer with taxable income of $250,000 who is a 50% partner in an accounting firm.
III.A single taxpayer with taxable income of $100,000 that operates an accounting business as a sole proprietorship.
IV.A single taxpayer with taxable income of $125,000 who owns 100% of the stock of an S Corporation that produces oak tables.
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• A)Only statement I is correct
• B)Only statement III is correct.
• C)Only statements III and IV are correct.
• D)Only statements II, III, and IV are correct.
• E)Statements I, II, III, and IV are correct.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads incurred to convert materials into finished goods.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including costs related to direct materials, direct labor, and manufacturing overhead.

Total Factory Overhead Cost

Total factory overhead cost includes all indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of non-direct labor, that are not directly tied to the production of specific goods.

Direct Labor

The labor costs associated with workers who are directly involved in the production of goods or services.