Jason and Paula Are Married

question 47

Multiple Choice

Jason and Paula are married. They file a joint return for 2018 on which they report taxable income before the QBI deduction of $200,000. Jason operates a sole proprietorship and Paula is a partner in the PQRS Partnership. Both are a qualified trade or business and neither is a specified services business. Jason's sole proprietorship reports $150,000 of net income, W-2 wages of $45,000, and has qualified property of $50,000. Paula's partnership reports a loss for the year, and her allocable share of the loss is $40,000. The partnership reports no W-2 wages and Paula's share of the partnership's qualified property is $20,000. What is their qualified business income deduction for the year?

• A) $-0-.
• B) $11,750.
• C) $22,000.
• D) $30,000.
• E) None of the above.

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Definitions:

Profit Margin

A financial metric used to assess a company's profitability by comparing net income to sales.

Fair Market Value

An estimate of the market value of a property or asset, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller.

Statute of Frauds

A legal concept that requires certain types of contracts to be in writing and signed by the parties involved to be enforceable.

Orally Agree

To come to a mutual decision or arrangement through spoken words rather than written documents.