Question

John Mason operates a consulting business, Mason Enterprises, as a sole proprietorship. He had to transfer $100,000 of stocks and securities into Mason Enterprises’s name to show financial viability for the business. During the current year, the business had the following income and expenses from operations: Consulting revenue $125,000 Travel expenses 40,000 Transportation 3,000 Advertising 7,000 Office expense 3,000 Telephone 1,000 Dividend income 5,000 Interest income 2,000 Charitable contribution 1,000 Political contribution 6,000 Determine the Schedule C net income. How are items not included in the Schedule C net income reported?

Answer 1

Answer:

Calculation of Schedule C Net Income:

Particulars	Amount	Remarks
Consulting Revenue	$ 1,25,000
Travel Expenses	-$    40,000
Transportation	-$      3,000
Advertising	-$      7,000
Office Expenses	-$      3,000
Telephone	-$      1,000
Dividend Income		$ 5000 (Reported ON schedule B)
Interest Income		2000 (Reported ON schedule B)
Charitable Contribution		1000
Political Contribution		6000 (Non Deductible)
Schedule C Net Income	$    71,000

The dividend and interest income will be reported on Mason’s Schedule B of his Form 1040; the charitable contribution will be included with his personal charitable contributions and reported as an itemized deduction if he itemizes; the political contribution is nondeductible.

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