Sam and Betty, Each Single, Each Generate Sole Proprietor Income

Multiple Choice

Sam and Betty, each single, each generate sole proprietor income of $240,000. Sam's income is generated from a wholesale business while Betty's is earned from her law practice. Neither has any employees or qualified assets. Both claim the standard deduction and have other income equal to the standard deduction amount.

A) Both Sam and Betty will have a QBI deduction of $48,000.
B) Sam can obtain a QBI deduction, but Betty cannot because of the taxable income level and law practice is a specified service business.
C) Neither Sam nor Betty will generate a QBI deduction due to their taxable income levels.
D) None of the above.