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24 April, 10:32

Danielle is a partner in and sales manager for DG Partners, a domestic business that is not a specified service trade or business. During the tax year, she receives guaranteed payments of $250,000 from DG Partners for her services to the partnership as its sales manager. In addition, her distributive share of DG Partners' ordinary income (its only item of income or loss) was $175,000. What is Danielle's qualified business income?

a. $175,000.

b. $0.

c. $250,000.

d. $425,000.

e. None of these choices are correct.

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  1. 24 April, 13:03
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    a. $175,000

    Explanation:

    Qualified business income is the income on which sole business owners and partner's tax is deducted. They include only items that are taxable income and is connected with a particular business.

    Deduction of up to 20% qualified business income is allowed. Also 20% of qualified real estate investment trust, and qualified publicly traded partnership income.

    Danielle's qualified pay is $175,000. The $250,000 guaranteed payments for DG Partners does not qualify.
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