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Tracy and Jerome, equal shareholders in Macaw Corporation, receive $600,000 each in...

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Accounting

Tracy and Jerome, equal shareholders in Macaw Corporation, receive $600,000 each in distributions on December 31 of the current year. Macaws current-year taxable income is $1,000,000 and it has no accumulated E & P. Last year, Macaw sold an appreciated asset for $1,200,000 (basis of $400,000). Payment for one-half of the sale of the asset was made this year. How much of Tracys distribution will be taxed as a dividend?

a.

$0

b.

$300,000

c.

$500,000

d.

$600,000

Jenna owns and manages her single-member LLC, which provides a wide variety of financial services to her clients. She is married and will file a joint tax return with her spouse, Paul. Her 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 2021?

a.

$-0-.

b.

$57,000.

c.

$60,000.

d.

$70,000.

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