Exam 3: Additional Income Part 1

Maria runs a small business out of her home.She has expenses of $2,000 per year and uses the cash basis method of accounting.Her only employee is her cousin who works for her part-time.What form should she use to report her business income?

Dennis is a self-employed hair stylist who operates a salon in his home.The property taxes and interest allocated to the business amount to $5,000, maintenance and utilities allocated to the business total $2,100, and depreciation allocated to the business use of the home equals $3,100 for the current tax year. a.​If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office. b.​If Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.

Candace uses an office in her home exclusively for her business.The business use of the home is 100 square feet out of 2,000 square feet for the entire home.The total expenses to allocate are $3,000.Candace wishes to maximize her deduction in the current year.What is the amount of her home office deduction before any income limitations?

Carol, a CPA, is always required by her employer to wear to work either a gray or a blue business suit with matching shoes.Carol would never consider wearing her gray or blue suits and matching shoes anywhere other than work since she considers them uncomfortable as well as unattractive.Can Carol deduct the cost of the suits and shoes as special work clothing or uniforms? Explain

Peter is a self-employed attorney.He gives the following information about his business to his CPA for use in preparing his 2018 tax return: Income Fees from law practice Malpractice insurance Office rent Office supplies Travel expense Meals Entertainment Paral egal wages Country club dues (Peter uses the club for business entertainment) \1 53,000 \8 ,000 12,000 5,600 2,000 3,800 4,000 25,500 2,500 Peter also drove his car 5,580 miles for business and used the standard mileage method for computing transportation costs.How much will Peter show on his Schedule C for 2018 for: a.Income b.Tax deductible expenses c.Taxable income

A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.

Janine is a sole proprietor owning a small specialty store.The business records show that the cost of the store's individual inventory items has been steadily increasing.The cost of the end of the year inventory is $125,000 and the cost of the beginning of the year inventory was $150,000.Janine uses the LIFO method of inventory valuation.Which of the following statements is true?

Gary is a self-employed accountant who pays $2,000 for business meals.How much of a deduction can he claim for the meals and where should the deduction be claimed?

Girard is a self-employed marketing consultant who spends significant time entertaining potential customers.He keeps all the appropriate records to substantiate his entertainment.He has the following business-related expenses in the current year. Business meals \ 7,000 Tickets to baseball games 500 Tickets to football games 500 Yacht maintenance (the yacht is all business use) 6,000 What is the tax deductible entertainment expense Girard may claim in the current year? On which tax form should he claim the deduction?

Acme Corporation had the following expenses: 1. 1,000 pads of paper embossed with the company logo to hand out at the Big Time Conventio 2. Display racks to use at the convention center 3. An all-expense vacation for Susie's 25 years of service awarded under a qualified plan 4. A golden cone to recognize Wayne's on the job safety record Acme has a qualified plan for the job awards.Calculate Acme's total deductions for the above expenses.

Schedule C or Schedule C-EZ may be used to report the net profit or loss from a partnership with business expenses of $2,500 or less.

Which of the following items incurred while on travel is not considered a travel expense?

Which of the following expenses, incurred while on travel, does not qualify as a travel expense?

The expense of a sales luncheon may be deductible (50 percent in the current year)even if no sale is made.

Marco makes the following business gifts during the year: Miss Scarlett (a potential dient) \ 30 Mr. and Mrs. White (both are dlients) \ 40 Professor Plum (a client) \ 18 Mrs. Plum (the nonclient wife of Professor Plum) \ 12 Charles Mustard (Marco's boss) \ 27 Marco also spent $15 on wrapping paper and a card for the above gift to the Whites.Calculate Marco's total allowed deduction for gifts

There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.

Martin has a home office for his business as an agent for rock-and-roll bands.The business shows a loss of $2,000 before home office expenses.How should the home office expenses be treated?

During the current year, Harry, a self-employed accountant, travels from Kansas City to Miami for a seven-day business trip.While in Miami, Harry decides to stay for an additional 5 days of vacation.Harry pays $600 for airfare, $200 for meals, and $500 for lodging while on business.The cost of meals and lodging while on vacation was $300 and $500, respectively.How much may Harry deduct as travel expenses for the trip?

Brandi operates a small business and employs three staff members, all of which perform the same tasks with more or less the same level of skill.Two of the staff members are paid wages of $10 per hour; however, the third staff member, Whiski, is Brandi's sister and earns $17 per hour.What amount per hour can Brandi deduct for wages paid to Whiski?

Sally is a high school math teacher.In 2018, she purchases $400 worth of supplies related to her teaching.Her spouse, Gabe, is a high school math teacher and spends $100 in education supplies for his classes.If married filing jointly, what is the 2018 for AGI educator's expenses deduction?