Question

Scott Butterfield is self-employed as a CPA. He uses the cash method of accounting, and his Social Security number is 644-47-7833. His principal business code is 541211. Scott's CPA practice is located at 678 Third Street, Riverside, CA 92860. Scott’s income statement for the year shows the following: Income Statement Scott Butterfield, CPA Income Statement 12/31/2017 Current Period Prior Period 1/1/2017 to 12/31/2017 1/1/2016 to 12/31/2016 REVENUES Tax Services $276,400 $72,154 Accounting Services 27,640 50,256 Other Consulting Services 60,808 7,690 TOTAL REVENUES 364,848 130,100 COST OF SERVICES Salaries 55,280 29,400 Payroll Taxes 2,387 2,275 Supplies 300 1,225 TOTAL COST OF SERVICES 57,967 32,900 GROSS PROFIT (LOSS) 306,881 97,200 OPERATING EXPENSES Advertising and Promotion 2,000 – Business Licenses and Permits 620 250 Charitable Contributions 400 250 Continuing Education 1,500 – Dues and Subscriptions 1,640 3,500 Insurance 16,584 870 Meals and Entertainment 12,438 5,400 Office Expense 5,528 – Postage and Delivery 85 – Printing and Reproduction 2,764 – Office Rent 8,292 13,800 Travel 11,056 750 Utilities 3,317 2,724 TOTAL OPERATING EXPENSES 66,224 27,544 NET INCOME (LOSS) $240,657 $69,656 Scott also mentioned the following: The expenses for dues and subscriptions were his country club membership dues for the year. The charitable contributions were made to a political action committee. Scott does not generate income from the sale of goods and therefore does not record supplies and wages as part of cost of goods sold. Scott placed a business auto in service on January 1, 2014 and drove it 7,234 miles for business, 4,340 miles for commuting, and 8,681 miles for nonbusiness purposes. His wife has a car for personal use. Complete Schedule C for Scott showing Scott's net income from self-employment. Assume Scott has evidence to support his deductions. If required, only use the minus sign to indicate a net loss. When required, round amounts to the nearest dollar.

Answer 1

Schedule C

Particulars	Amount in $
Name of Proprietor	Scott Butterfield
Social Security Number	644-47-7833
A. Principal Business or Profession	CPA Practice
B. Code of Business	541211
C. Business Name	Scott Butterfield, CPA
D. Employer's ID Number (EIN)	N.A.
E. Business Address	678 Third Street, Riverside, CA 92860
Part I
1. Gross Receipts	3,64,848
2. Returns and Allowances	NIL
3. (Substract Line 2 from Line 1)	3,64,848
4. Cost of goods sold	NIL
5. Gross Profit (Substract Line 4 from Line 3)	3,64,848
6. Other income	NIL
7. Gross income	3,64,848
Part II
8. Advertising	2,000
15. Insurance	16,584
18. Office expenses (5528 + 85 + 300)	5,913
20. Rent (Business Property)	8,292
23. Taxes & License (620 + 2,387)	3,007
24. Travel, Meal and Entertainment (11,056 + 12,438)	23,494
25. Utilities	3,317
26. Wages	55,280
27. Other expenses (1500 + 2764)	4,264
28. Total expenses	122,151
29. Tentative Profit (Substract Line 28 from Line 7)	242,697
30. Expenses for business use of your home	NIL
31. Net Profit/Loss (Substract Line 30 from Line 29)	242,697

Note:

1. Charitable contributions are not included while calculating deduction under other expenses.

2. Since the assessee is following cash basis of accounting, hence dues and subscriptions for his country club membership due for the year shall not be an allowable deduction.

3. A few expenses are regrouped and reclassified based on the headings and sub-headings given in the Schedule.