Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 3, Problem 2MCQ
To determine
Introduction:
Taxable income refers to the income derived after specific deductions. A sole proprietor is a person who is the only of the business and is supposed file Schedule C for the earnings from business.
To choose: The correct option.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jayda, who is self-employed, maintains an office in her home that comprises 16% (370 square feet) of total floor space. Gross income for
her business is $44,150, and her residence expenses are as follows:
Real property taxes
Interest on mortgage
Operating expenses
Depreciation (based on 16% business use)
If required, round your final answer to the nearest dollar.
a. What is Jayda's office in the home deduction based on the regular method?
$
$4,860
8,100
4,050
6,395
b. What is Jayda's office in the home deduction based on the simplified method?
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an officein her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The followinghome-related expenses have been allocated to her home office under the actual expense method forcalculating home office expenses.
Real property taxes $ 1,600Interest on home mortgage 5,100Operating expenses of home 800Depreciation 1,600
Also, assume that, not counting the sole proprietorship, Rita AGI is $60,000. Rita itemizes deductions,and her itemized deduction for non-home business taxes is less than $10,000 by more than the realproperty taxes allocated to business use of the home.Assume Rita’s consulting business generated $15,000 in gross income.
a. What is Rita's home office deduction for the current year?
b. What would Rita's home office deduction be if her business generated…
Cindy, who is self-employed, maintains an office in her home that comprises 10% (340 square feet) of total floor space. Gross income for her business is $54,650, and her residence expenses are as follows:
Real property taxes
$4,092
Interest on mortgage
6,820
Operating expenses
3,410
Depreciation (based on 10% business use)
8,075
a. What is Cindy's office in the home deduction based on the regular method?
b. What is Cindy's office in the home deduction based on the simplified method?
Chapter 3 Solutions
Income Tax Fundamentals 2020
Ch. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Which of the following formulas represents the...Ch. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Heather drives her minivan 953 miles for business...Ch. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Under the high-low method, the federal per diem...
Ch. 3 - Prob. 11MCQCh. 3 - Prob. 12MCQCh. 3 - Prob. 13MCQCh. 3 - Prob. 14MCQCh. 3 - Prob. 15MCQCh. 3 - Prob. 16MCQCh. 3 - Prob. 17MCQCh. 3 - Prob. 18MCQCh. 3 - Prob. 19MCQCh. 3 - Prob. 20MCQCh. 3 - Prob. 21MCQCh. 3 - Prob. 22MCQCh. 3 - Prob. 23MCQCh. 3 - Stewie, a single taxpayer, operates an activity as...Ch. 3 - Prob. 2PCh. 3 - Lawrence owns a small candy store that sells one...Ch. 3 - Business with gross receipts of $25 million or...Ch. 3 - Teresa is a civil engineer who uses her automobile...Ch. 3 - Prob. 7PCh. 3 - Martha is a self-employed tax accountant who...Ch. 3 - Prob. 9PCh. 3 - Go to the U.S. General Services Administration...Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Marty is a sales consultant. Marty incurs the...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Cooper and Brandy are married and file a joint...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Cindy operates a computerized engineering drawing...Ch. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Lew is a practicing CPA who decides to raise...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $6,060. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes Interest on home mortgage Operating expenses of home $ 1,830 5,445 915 1,738 Depreciation Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,600. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $16,150 in gross income. (Leave no answer blank. Enter zero if applicable.) d. Given the original facts, what types and amounts of expenses will she carry…arrow_forwardJayda, who is self-employed, maintains an office in her home that comprises 26% ( 360 square feet) of total floor space. Gross income for her business is $45,650, and her residence expenses are as follows: Real property taxes Interest on mortgage Operating expenses Depreciation (based on 26% business use) If required, round your final answer to the nearest dollar. a. What is Jayda's office in the home deduction based on the regular method? 9,595 X Feedback $4,764 7,940 3,970 4,715 Check My Work Self-employed individuals are not allowed a deduction for office in the home expenses unless a portion of the residence on a regular basis under certain circumstances. b. What is Jayda's office in the home deduction based on the simplified method? 1,100 Xarrow_forwardRita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita’s consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense…arrow_forward
- Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita’s consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense…arrow_forwardRita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita’s consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense…arrow_forwardRita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.Assume Rita’s consulting business generated $15,000 in gross income. (Leave no answer blank. Enter zero if applicable.) a. What is Rita’s home office deduction for the current…arrow_forward
- Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $6,000. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,800 Interest on home mortgage 5,400 Operating expenses of home 900 Depreciation 1,720 Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.Assume Rita’s consulting business generated $16,000 in gross income. a. What is Rita’s home office deduction for the current year?arrow_forwardRita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,720. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,660 Interest on home mortgage 5,190 Operating expenses of home 830 Depreciation 1,636 Also, assume that, not counting the sole proprietorship, Rita's AGI is $61,200. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $15,300 in gross income. Note: Leave no answer blank. Enter zero if applicable. Required: What is Rita's home office deduction for the current…arrow_forwardMaria Clara Santos works is an accountant with her own accounting firm as well asteaching full time in a university. She earns an annual income of 2,679,000 fromthe operation of her firm. She is married with 4 children all minors. She alsoreceives income of 58,900 per month in the university. She receives 13 th and 14 thmonth pay, and other benefits amounting to 246,099 (excluding 13 th and 14 th monthpay). Compute for her annual tax return.arrow_forward
- Tony and Lyly are married during the tax year. Tony is a botanist at Red Corporation. Tony earns a salary of $70,000 per year. Lyly owns an accounting practice as a sole proprietor (it qualifies as a full trade or business). Lyly generates $100,000 of revenues during the year. She has the following business payments associated with her firm: Utilities: $2,000 Office Rent: $15,000 Office Supplies: $1,700 Self-employed health insurance premiums: $5,000 Self-Employment Tax (hers): $10,000 Salary for her secretary: $25,000 Fines/Penalties: $2,500 State Income Tax (from business): $6,000 Payroll Taxes (secretary’s): $2,000 Meals: $1,200 (100% for 2021) Payment to officer to let her go from speeding while on her way to a client meeting $100 Lyly also contributed $6,000 into her Traditional IRA. They also have the following personal expenses during the year: Medical Expenses: $17,500 State & Local Taxes (personal): $11,000 Federal Income Tax Payments (personal): $7,000 Cash…arrow_forwardR ita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,800. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,700 Interest on home mortgage 5,250 Operating expenses of home 850 Depreciation 1,660 Also, assume that, not counting the sole proprietorship, Rita’s AGI is $62,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita’s consulting business generated $15,500 in gross income. What is Rita’s home office deduction for the current year? What would Rita’s home office…arrow_forwardLisa is a CPA who works for a public accounting firm. How much of the following fringe benefits are EXCLUDED from her gross income if paid for or provided by her employer? Membership in AICPA $ 300 Subscription to a manufacturing association journal (she has several clients in manufacturing) 110 Mobile Phone (entire year of usage) 1,300 Personal photocopying on office machine 15 Coffee and donuts at monthly meeting 80 Membership in state CPA association 150 Reimbursements for child care expenses 2,000 a. $655 b. $1,955 c. $2,655 d. $3,955arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
