Question

Appendix F:  Willow Wade Information

For your sixth client, your boss wants you to prepare Form 1040, Schedule C, and SE for Willow Wade.

Facts:

Willow Wade is a successful, 30-year old attorney.   She has a law office near the circuit court building on Smith Court and a home office. The home office is one of the bedrooms in her 4-bedroom home in Aiea, HI.   She is on the cash method.  

Taxpayer	Willow Wade 41-123 Kaneu Drive Aiea, HI 96701
Social Security No:	255-10-0000
Gross Income	$500,000
Secretary salary (?)	25,000
Rent expense	10,000
Supplies	500
Postage	200
Utilities (for Smith Ct. office)	1,000
Court fees  (are these fees she is paying for clients who are filing cases?  Would they be receivables on her books?) I don’t know.  I am sure there might be unreimbursed court fees that attorneys might have to pay?	1,000
Insurance (prepaid or expense?) – Is that important since she is a cash based tax payer?  Wouldn’t that mean she paid $2000 in cash for the year…either the beginning or the end..so maybe prepaid, maybe not?	2,000
Total Square Footage of Willow’s home	3,000
Square footage of Willow;s home office	300 square feet
Home expenses for the year (utility expenses (gas, electric, etc.), depreciation, and property taxes)	$8,000
Mileage (4,000 to and from court, 2,000 to and from her home to work and back, 4,000 was personal driving? "just driving around")	10,000 miles
New car purchased last year cost	$25,000

Prepare Form 1040, Schedule C, and SE for her self-employment taxes.

Answer 1

SOLUTION:-

Schedule SE line wise amount is below:

Line	Sch SE	Section A
1a	Sch F 34
1b	SS Benefits
2	Profit	457,340
3	Total	457,340
4	Taxable base	422,353
5	Tax	26,942
6	Deduction	13,471

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