Question

In: Accounting

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?

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Martin Galloway, the sole propiertor of a consulting business, has gross receipts of $45,000 in 2017....
Martin Galloway, the sole propiertor of a consulting business, has gross receipts of $45,000 in 2017. His adresss 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 Meals and entertainment 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...
Samantha Dolan operates a small consulting business as a sole proprietor. During 2018, she has the...
Samantha Dolan operates a small consulting business as a sole proprietor. During 2018, she has the following transactions related to the business: Customer sales on account $75,000 Collections from 2018 Credit Sales $5,000 Collections from 2018 Credit Sales $18,000 Business Bad debts $8,000 Operating expenses incurred during 2018 $44,000 Operating expenses from 2018 paid in 2018 $33,000 Operating expenses from 2018 paid in 2018 $10,000 Calculate the net income or loss from Samantha’s business using the accrual method of accounting...
Jonathan operates a business as a sole proprietor. His business is a lawn service and landscaping...
Jonathan operates a business as a sole proprietor. His business is a lawn service and landscaping business. In July 2018, Jonathan purchased two new lawn mowers at a cost of $6,000 each. He also purchased a new warehouse to store all the equipment in. The warehouse cost $200,000 and he purchased it in August 2018 In 2020, Jonathan had the following items of income and deduction: $70,000 of income form lawn service $20,000 in expenses related to his business Sale...
Jonathan operates a business as a sole proprietor. His business is a lawn service and landscaping...
Jonathan operates a business as a sole proprietor. His business is a lawn service and landscaping business. In July 2018, Jonathan purchased two new lawn mowers at a cost of $6,000 each. He also purchased a new warehouse to store all of the equipment in. The warehouse cost $200,000 and he purchased it in August 2018 In 2020, Jonathan had the following items of income and deduction: $70,000 of income form lawn service $20,000 in expenses related to his business...
Dave is a medical device distributor in Nevada and runs his business as a sole proprietor....
Dave is a medical device distributor in Nevada and runs his business as a sole proprietor. He therefore pays taxes on his business income as part of his individual income tax filing. Currently his effective tax rate is 37.9% ( 35% federal income tax rate plus 2.9% Medicare tax rate - there is no state income tax in Nevada which is why he moved there from California). He has recently been made aware of a new technology that can be...
Dave is a medical device distributor in Nevada and runs his business as a sole proprietor....
Dave is a medical device distributor in Nevada and runs his business as a sole proprietor. He therefore pays taxes on his business income as part of his individual income tax filing. Currently his effective tax rate is 43.4% He has recently been made aware of a new technology that can be used during surgery that more effectively controls blood loss. Deployment of this technology would require purchasing additional equipment and employing a couple of technicians to use the equipment...
19) Boris, a sole proprietor, manufactures glass containers for beverages. Boris wants to convert his business...
19) Boris, a sole proprietor, manufactures glass containers for beverages. Boris wants to convert his business to a corporation. Just before he completes the paperwork to incorporate, Boris renews the lease on his factory. Which of the following is true? Select one: a. The lease contract is breached as soon as Boris’ business is incorporated. b. The new corporation is instantly liable on the lease as soon as it is incorporated. c. Boris remains personally liable on the lease unless...
Frank is the sole proprietor of a small business.  In 2019, the business income for purposes of...
Frank is the sole proprietor of a small business.  In 2019, the business income for purposes of computing the Section 179 deduction is $350,000.  During the year, the following assets were placed in service.  (Assume no bonus depreciation) Asset # 1 – Machinery  - $1,790,000 Asset # 2 – Equipment - $365,000 Asset # 3 – Computer - $96,000 Asset # 4 – Equipment - $468,000 3a) Calculate the amount of the phase out limitation? 3b) What is the maximum amount of Section 179...
Case Background A sole proprietor (the owner) has established a service business specializing in recruitment for...
Case Background A sole proprietor (the owner) has established a service business specializing in recruitment for businesses needing specialized Tool Industry staff. The trail balance at the end of the first three months of operations is provided below. Part of the service is to train people before they are placed with companies. The owner has asked, you, the accountant for HR, to prepare the answers to the questions below considering the notes provided. Trial Balance Accounts Debits Credits Cash 24,500...
4-3 Joe Smith has been in the plumbing business as a sole proprietor for the past...
4-3 Joe Smith has been in the plumbing business as a sole proprietor for the past 35 years and is planning to retire. His insurance agent has told him that he should continue to carry Products and Completed Operations Liability coverage. Do you agree with the agent’s recommendation? Explain your answer
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT