Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a...

Question

Question

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a...

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC records net income of $246,500 after deducting Robert's $73,950 salary. In addition to his compensation, ABC pays Robert dividends of $172,550.

a. What is Robert's qualified business income? $

b. What is Robert's qualified business income if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $163,950? $

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Answer -

Information Given -

Robert is the sole shareholder and CEO of ABC Inc., an S corporation that is a qualified trade or business.

During the current year, ABC records net income of $246500 after deducting Robert's $73950 salary.

ABC pays Robert dividends of $172550.

.

(a) -- What is Robert's qualified business income?

Answer -

Robert's qualified business income = $246500 (that is the net income of ABC Inc. after deducting Robert's $73950 salary).

.

(b) -- What is Robert's qualified business income if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $163950?

Answer -

The additional amount of salary can be deducted.

Robert's qualified business income = [$246500 - ($163950 - $73950)] = $156500.

Add a comment

Answer 2

Similar Homework Help Questions

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a...

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a qualified trade or business. During the current year, ABC has net income of $309,500 after deducting Robert's $92,850 salary. In addition to his compensation, ABC pays Robert dividends of $216,650. a. What is Robert's qualified business income? $ b. What is Robert's qualified business income if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $182,850? $
Robert is the sole shareholder and CEO of ABC, Inc., an corporation that is a qualified...

Robert is the sole shareholder and CEO of ABC, Inc., an corporation that is a qualified trade or business. During the current year, ABC has net income of $325,000 after deducting Robert's $100,000 salary. In addition to his compensation, ABC pays Robert dividends of $250,000 a. What is Robert's qualified business income? b. What is Robert's qualified business income you determined that reasonable compensation for someone with Robert's experience and responsibilities is $200,000
Alicia is the sole shareholder and CEO of ABC Inc. an scorpion that is led trade...

Alicia is the sole shareholder and CEO of ABC Inc. an scorpion that is led trade or business. During the current year, ABC has net income of $325,000 after deducting Alicia's $100,000 salary. In addition to her compensation, ABC pays Alicia dividends of $250,000. After reviewing comparable companies you determine that reasonable compensation for someone with her experience and responsibilities is $200,000 What is Alida's qualified business income? a. $325,000 c. $225,000 d. $200,000. None of these choices are co

Purple Company records $200,000 in net income for 2019 before deducting any compensation or other payment...

Purple Company records $200,000 in net income for 2019 before deducting any compensation or other payment to its sole owner, Kirsten. Kirsten is single and she claims the $12,200 standard deduction. Purple Company is Kirsten's only source of income. Ignoring any employment tax considerations, compute Kirsten's after-tax income for each of the following situations. Click here to access the 2019 individual tax rate schedule to use for this problem. Assume the corporate tax rate is 21%. When required, carryout intermediate...
Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S corporation....

Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S corporation. Until recently, Troy’s salary was in line with the salaries of comparable CEOs. However, Troy recently learned that he could reduce his tax burden, if he were to reduce his salary. By lowering his salary Troy would receive less employee compensation that is subject to FICA tax and is not eligible for the qualified business income deduction, and he would be allocated more business...
ETHICS Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S...

ETHICS Troy is the sole shareholder and CEO of BQT. BQT is a very profitable S corporation. Until re- and is not eligible for the qualified business in- come deduction, and he would be allocated more business income that is not subject to cently, Troy's salary was in line with the salaries of comparable CEOS. However, Troy recently learned that he could reduce his tax burden if FICA tax and qualifies for the qualified business income deduction. After considering the...

Paul, who is in the 24% tax bracket, is the sole shareholder of a corporation and...

Paul, who is in the 24% tax bracket, is the sole shareholder of a corporation and receives a salary of $60,000 each year. To avoid double taxation, he makes an S election for the corporation. The corporation currently is earning $100,000, and he expects earnings to grow at a rate between 15% and 20% per year. The earnings are reinvested in the growth of the corporation, and no plans exist for distributions to Paul. Complete the paragraph below regarding problems...
Oak Inc., a C corporation, reports taxable income of $100,000 before paying salary to its sole...

Oak Inc., a C corporation, reports taxable income of $100,000 before paying salary to its sole shareholder, Sue. Her marginal tax rate on ordinary income is 22 percent and 15 percent on dividend income. If Oak pays Sue a salary of $75,000 but the IRS determines that Sue’s salary in excess of $40,000 is unreasonable compensation, what is the amount of the overall tax (corporate level + shareholder level) on Oak’s $100,000 pre-salary income (ignore the net investment income tax)?...
In the current year, Azure Company has $350,000 of net operating income before deducting any compensation...

In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has an interest on municipal bonds of $25,000. Sasha has significant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. (Ignore the deduction for qualified...

Problem 17-30 (LO. 1) In the current year, Azure Company has $350,000 of net operating income...

Problem 17-30 (LO. 1) In the current year, Azure Company has $350,000 of net operating income before deducting any compensation or other payment to its sole owner, Sasha. In addition, Azure has interest on municipal bonds of $25,000. Sasha has significant income from other sources and is in the 37% marginal tax bracket. Based on this information, determine the income tax consequences to Azure Company and to Sasha during the year for each of the following independent situations. (Ignore the...

Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a...

Homework Answers

Add Answer to:
Robert is the sole shareholder and CEO of ABC, Inc., an S corporation that is a...

Post as a guest

Earn Coins