Signal Corporation is an S corporation owned equally by Serena and three other shareholders.The corporation reported $900,000 of business receipts,$500,000 of business deductions and $40,000 of dividend income.On Serena's return,she will be entitled to a deduction for qualified business income of
A)$20,000.
B)$22,000.
C)$80,000.
D)$88,000.

Question

Quizplus · Accepted Answer

Serena's share of the business income is ($900,000 - $500,000) / 4 = $100,000. The qualified business income deduction is 20% of her share, which is 20% of $100,000 = $20,000. The dividend income is not included in the qualified business income calculation.

Signal Corporation Is an S Corporation Owned Equally by Serena