For several years, Blake owned and operated a financial planning business from h
ID: 2602210 • Letter: F
Question
For several years, Blake owned and operated a financial planning business from his home. It is a sole propriotership reported on schedule C form 1040 on April 2016, he won a 15000000 lottery and closed his business on April 10, 2016 Blake sold all the items he had been depreciating for his home business.
He used 350 square feet of his 2100 square foot rented loft exclusively and regularly for business.
Blake used the cash accounting method and had the following income and expenses for his financial planning business.
Advertising $80
Business insurance $685
Business license $100
Comprehensive health insurance $7788
Office supplies $76
Postage $38
Rent $14000
Renters insurance $1055
Second phone for business $103
Tax preparation $350
utilities $ 2281
There was no carry-over of unallowed expenses. There was no section 179 expense deduction taken for any of the assets that were sold April 10, 2016. Depreciation includes bonus depreciation when available. All assets were 100 percent business use.
Item Date in service Basis Prior depreciation
New computer June 15, 2013 $1750 $623
New printer June 15, 2013 $350 $125
Used desk and chair June 15, 2013 $1200 $675
Blake disposed of his business assets in the following manner.
Computer sold for: $220
Printer junked at waste center
Used desk and chair sold for $330
If Blake elects to use actual in home office expenses, what is the amount of his deduction?
A.. 648
B. 743
C.$2576
D..2957
If Blake elects to use office in home simplified method, what is the amount of his scheduled C net profit or loss?
A.$118
B.18
C.(82)
d.(100)
Explanation / Answer
Answer:
1Answer: Option C: $2576,The amount of Deduction will be $2576.
Explanation:
Expenses:
$
Utilities
$ 2,281.00
Office Supplies
$ 76.00
Postage
$ 38.00
Second Phone for business
$ 103.00
Advertising
$ 80.00
$ 2,578.00
2Answer):Option A
The Amount of his scheduled C net profit or loss will be $117 Approximately ($118)
Explanation:
Incomes
$
$
Rent
$ 14,000.00
Utilities
$ (2,281.00)
Comprehensive Health Insurance
$ (7,788.00)
$ 3,931.00
Less:
Expenses:
Write off -Deductions
New Computer
$ 907.00
New Printer
$ 225.00
Used Desk and Chair
$ 195.00
Office Supplies
$ 76.00
Postage
$ 38.00
Renters Insurance
$ 1,055.00
Second Phone for business
$ 103.00
Tax Preparation
$ 350.00
Advertising
$ 80.00
Business Insurance
$ 685.00
Business License
$ 100.00
$ (3,814.00)
Net Profit
$ 117.00
Hence the approximate Answer will be $118. Option (A) will be correct.
Expenses:
$
Utilities
$ 2,281.00
Office Supplies
$ 76.00
Postage
$ 38.00
Second Phone for business
$ 103.00
Advertising
$ 80.00
$ 2,578.00