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Martin Galloway, the sole proprietor of a consulting business, has gross receipts of $45,000. His address...

Martin Galloway, the sole proprietor of a consulting business, has gross receipts of $45,000. His address is: 1223 Fairfield Street, Westfield, New Jersey and his SSN is 158-68-7799. Expenses paid by his business are

Advertising $ 500       
Supplies 2,900       
Taxes and licenses 500       
Travel (other than meals) 600       
Business meals 400       
Health insurance premiums (for Martin) 1,400       
Individual retirement account contribution 2,500       

During the year, Martin drives his car a total of 15,000 miles (700 business miles and 550 personal miles per month). He paid $100 for business-related parking and tolls. He paid $120 in fines for speeding tickets when he was late for appointments with clients. Martin’s office is located in his home. His office occupies 500 of the 2,000 square feet in his home. His total (unallocated) expenses for his home are

Mortgage interest $6,000       
Property taxes 1,700       
Insurance 700       
Repairs and maintenance 300       
Utilities 1,600       

Depreciation for the business portion of his home is $1,364.

  1. What is Martin’s net income (loss) from his business for 2018?
  2. How much self-employment tax must Martin pay?
  3. Based on this information, are there any other deductions that Martin can claim on his individual tax return other than those reported on his Schedule C?
  4. How would your answers to the above items change if Martin elects to use the simplified method for home office expenses?

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ekkarill92 answered 2 years ago
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