Individual Income Taxes
Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 9, Problem 44P
To determine

Determine Mr. D’s QBI deduction.

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Terry owns land that serves as security for a $50,000 mortgage held by Key Bank. When Terry's tax basis is the land was $15,000 and the land's fair market value was $40,000, Key Bank forecloses on the land and takes title in full satisfaction of the mortgage balance. Which of the following statements is correct? a. If the mortgage is recourse, Terry must recognize gain on the foreclosure but no income from the discharge of indebtedness. b. If the mortgage is nonrecourse, Terry must recognize gain on the foreclosure but no income from the discharge of indebtedness. c. Terry only recognizes income from the discharge of indebtedness if the land was used in a trade or business. d. If the mortgage is nonrecourse, Terry must recognize gain on the foreclosure and income from the discharge of indebtedness. None of the above e.
Alice and Bob, married filing jointly, own AB, LLC (which they tax as a partnership). The LLC is not a specified service business and has QBI of $800,000 after all applicable deductions. AB paid total W-2 wages of $300,000, and the total unadjusted basis of property held by ABC is $3,200,000. Their taxable income before the QBI deduction is $1,000,000. What is their QBI deduction for the current year?
Peter Samuels owns and manages his single member LLC that provides a wide variety of financial services to his clients. He is married and will file a joint tax return with his spouse, Amy. His LLC reports $300,000 of net income, W-2 wages of $120,000, and assets with an unadjusted basis of $75,000. Their taxable income before the QBI deduction is $ 285,000 (this is also their modified taxable income). What is their QBI deduction for 2023?

Chapter 9 Solutions

Individual Income Taxes

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