Question

In: Accounting

Diana Cohen received the following revenue during the year (she uses the cash method of accounting)....

Diana Cohen received the following revenue during the year (she uses the cash method of accounting). Consulting revenue reported to her on a Form 1099-MISC, Box 7 High-end Retail $32,000 Jensen’s Health Products $8,500 Strategic Solutions $3,750 Board of director compensation reported to her on a Form 1099-MISC, Box 7 Natural Sunshine, Inc. $6,500

During the year, Diana paid the following business expenses: Consultant-related: Airfare $2,900 Hotel $1,450 Meals $390 Parking $320 Diana drove 290 business miles for her consulting-related activities (she has documentation to verify) Board of Director-related: Meals $125 Hotel $225 Diana drove 315 business miles for her board of director activities (she has documentation to verify) Neither of Diana’s business activities required the filing of Form(s) 1099 to report payments she made during the tax year. In addition, Ms. Cohen drove a 2014 Lexus purchased on January 1, 2014 for all her business mileage. She drove the vehicle a total of 10,605 miles during the year for all purposes. Diana has written documentation to support the mileage amounts. She also has access to another vehicle for personal purposes.

Solutions

Expert Solution

The tax year is not mentined here hence it is assumed that tax year is 2019.

For 2019 tax year the standard mileage claim were 58 cents per business mile droven.

Also it is not clear from the question what is required, in absence it is assumed that net income computation is required for both income which works out to : 45,775.80 (39,746.80+6,029.80)

Consulting revenue Amount Eligible expense Basis of Calculation
Highend Retail           32,000.00
Jensen’s Health Products             8,500.00
Strategic Solutions             3,750.00
Total Consulting Income           44,250.00
Consultant-related Expenses
Airfare             2,900.00              2,900.00
Hotel             1,450.00                 725.00 1450*50%
Meals                390.00                 390.00
Parking                320.00                 320.00
Mileage Claim                 168.20 290*0.58
Total Expenses              4,503.20
Net Income from Consulting            39,746.80
Particular Amount Eligible expense Basis of Calculation
Board of director compensation                    6,500.00
Board of Director-related expense
Meals                       125.00                   62.50 125*50%
Hotel                       225.00                 225.00
Mileage Claim                 182.70 315*0.58
Total Expenses                 470.20
Net Income from Board of director compensation              6,029.80

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