Anthony, one of your cousins, is operating a very successful luxury nail salon called An-Toe-Nail. Other...

Anthony, one of your cousins, is operating a very successful luxury nail salon called An-Toe-Nail. Other than that, Anthony is also work part-time as a freelancer graphic designer.
In 2020, Anthony have the income from his designing job of $100k and the revenue from the An-Toe-Nail salon is $800k. During 2020, below are items that Anthony spend money on:

Anthony purchased a new car in Jan 2020 which cost $60k. The car is his main vehicle for the year which he will use to drive to and from work.
Employee salary: $300k in total, paying for 6 nail technicians, each $50k/year.
Utilities cost: $10k
Supplies (nail polishes, glitter, chemical, etc.): $10k
Nail salon equipment: $50k. Anthony told you that these equipment need to be purchased new every year for some reason. Since the nail salon is a luxury one, he spent twice the money to buy this luxury equipment (the similar but lower quality equipment only cost $25k).

Anthony asks for your help in figuring out his taxable income for 2020 before the standard deduction. As a tax expert, you understand that what he means was to help him calculate his AGI.

What is Anthony Gross income in 2020? (Show calculation and explanation if needed)
What is Anthony Deduction for AGI in 2020? Show calculation and explanation. Answer without explanation will result in no credit
Provided that AGI = Total Gross income – Total Deduction for AGI. What is Anthony AGI for 2020?

Solutions

Expert Solution

Please Note that all amounts mentioned below are in $

Income From Business - 800K

+Income Form Free lancing Business - 100K

Total Gross Income - 900K - Answer to part A

Adjusted Gross Income(AGI)

Deductions available are ( along with the explanations)

Employee Salary - 300K (Revenue Expenditure)

Utility Cost - 10K (Revenue Expenditure)

Supplies - 10K (Revenue Expenditure)

Nail Equipment - 50K (Revenue Expenditure as the same is to be incurred every year. So the productivity of that Equipment is less than the year therefore not capitalised)

Car - 0K (Capital Expenditure and the same is to be capitalised and will be reflected in the Balance Sheet. Yes there would be an impact of Depreciation on the same but there is no Rate specified so assuming deprecition to be zero)

Total Deductions - 370K - Answer to part B

AGI - Gross Income - Deductions available

AGI - 900K - 370K = 530K - Answer to part C

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Use this worksheet to identify the major characteristics of your target market in a nail salon/nail...

Use this worksheet to identify the major characteristics of your target market in a nail salon/nail bar business. 1. What are the demographic characteristics of your target market? (For individuals, list age, gender, marital status, income, education level, and so on. For businesses, list years in business, annual revenue, and industry.) __________________________________________________________________________ 2. Describe the geographic area you are targeting. (Country, region, state, province, city, suburb, zip codes, and so on.) __________________________________________________________________________ 3. What are some of the psychographic aspects...

For a nail salon: Unique: What sets you apart from competitors? What are your differentiators? ____________________________________________________________...

For a nail salon: Unique: What sets you apart from competitors? What are your differentiators? ____________________________________________________________ Selling: What are the specific products or services, benefits or features you are selling? ____________________________________________________________ Proposition: What is the promise you are making to your customers? What’s in it for them?"

you invest $10,000 with your cousins successful Alpha Fund. Even though you withdraw $1,000 at the...

you invest $10,000 with your cousins successful Alpha Fund. Even though you withdraw $1,000 at the end of the next 3 years, you are able to quadruple you investment in 3 years. Approximately what interest rate did you earn? a. 30% b. 45% c. 66% d. 18% e. 52% f. 34%

Assume that one of your cousins takes a loan of $12,000 from a bank at 18...

Assume that one of your cousins takes a loan of $12,000 from a bank at 18 per cent interest rate. If your cousin plans to repay $1,200 per quarter against this loan amount, in how many years she would be able to repay the loan (and accumulated interest) fully?

1. At a family gathering, one of your cousins says, “We spend somuch more on...

1. At a family gathering, one of your cousins says, “We spend so much more on imports than other countries spend on our exports. It isn’t fair, and we should raise tariffs on imports to reduce how much we buy from other countries.”How might you explain to your cousin that current account deficits aren’t necessarily a sign of economic troubles to come?Contrary to common belief, the current account deficit does not suggest that we are living beyond our means.The flip...

One end of a very long wire is rigidly fastened to a post. The other end...

One end of a very long wire is rigidly fastened to a post. The other end is attached to an audio speaker which shakes the end of the wire in a direction perpendicular to its length. The wire has a diameter 1.1 mm , a volume mass density of 7800 kg/m3, and is held under a tension of 6.7 N. The speaker creates a wave on the wire with an amplitude 0.56 cm and a frequency of 65.0 Hz ....

One of the cars sold by Walt's car dealership is a very popular subcompact car called...

One of the cars sold by Walt's car dealership is a very popular subcompact car called the Rhino. The final sale price of the basic model of this car varies from customer to customer depending on the negotiating skills and persistence of the customer. Assume that these sale prices of this car are normally distributed with a mean of $19900 and a standard deviation of $360. Round your answers to 2 decimal places. a. Dolores paid $19525 for her Rhino....

Pick a local brand (from your city, region, or country) that has been very successful competing...

Pick a local brand (from your city, region, or country) that has been very successful competing against bigger global brands in its product category Explore and determine if the local brand you picked has a well-defined and executed brand strategy? What are the elements of the local brand strategy that enabled it to achieve this success? minimum 250 words

1. Two reactors, one of them a CMBR and the other a CSTR, are operating side...

1. Two reactors, one of them a CMBR and the other a CSTR, are operating side by side in parallel. Each is treating one half of a total flow rate of 800 gal/min containing a substance that enters at a concentration of 80 mg/L and experiences first-order degradation with a k value of 0.1/min. The reactors have identical volumes of 8000 gal, so they also have equal liquid retention times of 20 min. (a) What is the concentration of the...

Two very long wires run in the z direction, one at (1,0) cm, the other at...

Two very long wires run in the z direction, one at (1,0) cm, the other at (-1,0) cm. (a) If both wires are carrying a positive current of 0.6 A upwards in z, calculate the force each wire exerts on the other. Is it repulsive or attractive? (b) Do the same problem, but with the wire at (-1,0) cm carrying 0.6 A downwards. Hint: you shouldn’t have to do any more math for this part

Subjects