Exam 6: Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Alice is a high school teacher who enjoys knitting.She knits scarves and sweaters and sells them in a local boutique.Alice spends 10 to 15 hours a week knitting the scarves and sweaters.Alice had sales of $6,000 and expenses of $10,000 related to knitting and selling the goods.Alice's $10,000 of expenses consisted of $800 of interest expense and $1,600 in property taxes for her building and tools,$3,000 in supplies,and $4,600 in depreciation charges.How would Alice's income and expenses be reported on her tax return if her knitting activity is characterized as a hobby?

Taxpayers must use the mid-month convention when more than 40% of the personal property is placed in service during the last three months of the tax year.

The luxury auto limits on depreciation must be reduced if business use is less than 100%.

The cost of all personal property is recovered using a 200% declining-balance rate under MACRS.

Oscar bought an $800,000 apartment building on July 28,2017.On August 15,2017,he purchased $300,000 of 5-year class assets.Oscar elects to take the maximum expense on every asset.What is the maximum cost recovery deduction Oscar can take in 2017?

The standard mileage rate encompasses all of the following auto costs except for:

Which of the following properties is not eligible for the §179 expense election when purchased?

On November 30,2017,Constance purchased an apartment building for $750,000 (assume this is the Depreciable Cost excluding any Land valuation).Determine her cost recovery deduction for 2017 rounded to the nearest dollar.

Patricia,a professional gambler,had the following income and expenses in her business: Gambling winnings \2 75,000 Expenses Fees paid for illegal information 18,000 Travel costs \8 ,000 Office expenses 5,000 Supplies 3,000 Business long-distance phone charges 1,000 Tickets for illegal parking 900 How much net income must Patricia report from this business?

Which of the following is incorrect regarding luxury automobile limitations?

Beau earned $35,000 of net earnings from a tax preparation business that he runs during tax season.He also earned a salary of $100,000 from his full-time job.How much self-employment tax must he pay for 2017? (Round calculations to the nearest dollar)

If property is converted from personal-use property to business property,the depreciable cost basis is which of the following?

For an expense to be ordinary,it must be customary or usual in the taxpayer's particular business.

Della purchased a warehouse on February 25,2017,for $350,000.$45,000 of the price was for the land.What is her cost recovery deduction for 2017 rounded to the nearest dollar?

For a cash-basis taxpayer,any account receivable that is not collected can be written off as a bad debt.

Tonia acquires the following 5-year class property in 2017: Asset Date of Acquisition Cost X January 15 \ 70,000 Y May 28 45,000 Z November 23 90,000 Total \2 05,000 Tonia does not elect §179 or bonus depreciation.Tonia has $300,000 of taxable income from her business.Determine her total cost recovery deduction for the year.