In: Accounting
Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows:
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Complete the table below to determine the net income Margaret should show on her Schedule C.
If an amount is zero, enter "0". If required, round the amounts to the nearest dollar.
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ANSWER
The taxable business income is arrived as below:
Remarks/Explanation | ||
Gross Income | 45,000 | |
Expenses: | ||
Travel | 1,000 | Entire amount used for business purposes can be claimed as deduction. |
Political Contribution | 0 | Political contribution cannot be claimed as business deduction. |
Transportation (5,725*54.5/100) | 3,120 | For the year 2018, deduction of 54.50 cents per mile can be claimed as business deduction. |
Entertainment | 0 | For the year 2018, no amount of entertainment expenses can be claimed as business deduction. |
Gifts (9*25) | 225 | As per IRS rules, a maximum amount of $25 per gift can be claimed as business deduction. |
Rent and Utility (10,500*25%) | 2,625 | Amount of rent and utilities incurred towards business can be claimed as deduction. |
Total Expenses | 6,970 | |
Taxable Business Income | $38,030 |
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