Aaron 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 $325,000 after deducting Aaron's $100,000 salary. In addition to his compensation, ABC pays Aaron dividends of $250,000. What is Aaron's qualified business income?

Question

Quizplus · Accepted Answer

Qualified Business Income (QBI) includes the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business. In this case, the net income of $325,000 from ABC, Inc., after deducting Aaron's salary, is considered QBI. Dividends paid to Aaron do not reduce the QBI.

Aaron Is the Sole Shareholder and CEO of ABC, Inc