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 has 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. Would your answer to part (a) change if you determined that reasonable compensation for someone with Robert's experience and responsibilities is $163,950?

Homework Answers

Answer #1

Answer (a) Robert is the sole shareholder and CEO of ABC Inc. From The business Robert has earned an $246,500. Hence this is considering as qualified business Income also.

Business Income= $246,500

(b) Change in business income if we determined that reasonable compensation for someone with Roberts experience and responsibilities is $163,950.

Hence in this situation ABC Inc. has earned a net profit is $246,500 and now if ABC Inc. have to pay that amount to $$163,950.

Net business income- $246500

Less:-Compensation paid - $163,950

Net Business Income $82,550

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