Question

INCOME TAX RETURN PROBLEM Below is the taxpayer information for Beverly Johnson: Beverly (SS# 138-09-1983, date of birth: April 2, 1968) is a self-employed consultant whose business uses the accrual method of accounting. Her principal business code is 540700. Her business is located at 1501 Broadway, New York, N.Y., 10019. During the year, she had the following income and expense items: Income Professional Fees Earned $250,000 $5,413 $ 15,250 $ 30,500 $ 7,577 $ 6,000 $ 5,552 Expenses Office Expenses Depreciation Rent on Office Space Advertising Malpractice Insurance Utilities Travel (950 business miles driven) Taxes & Licenses Salary for her bookkeeper Meals & Entertainment Supplies Accounting Fees Legal Fees Interest on Bank Loan Cellphone for biz usage Suits/Uniform $5,500 $15,550 $ 13,050 $ 5,685 $9,765 $10,250 $4,550 $1,500 $2,800 REQUIRED: Please prepare the Schedule C (see attachment) for Beverly Johnson

Answer 1

Page 2 Schedule C (Form 1040 or 1040-SR) 2019 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: a Cost b Lower of cost or market c Other (attach explanation) Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . U res No 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation... 35 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . 36 37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . 38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . 39 Other costs. . . . . . . . . . . . . . . . . . . . . . . . . . 40 Add lines 35 through 39. . . . . . . . . . . . . . . . . . . . . . . 41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 . . . . . . 42 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562 43 When did you place your vehicle in service for business purposes? (month, day, year) 44 Of the total number of miles you drove your vehicle during 2019, enter the number of miles you used your vehicle for: a Business b Commuting (see instructions) c Other 45 Was your vehicle available for personal use during off-duty hours? . . . . . . . . . . . . . . . Yes O No 46 Do you (or your spouse) have another vehicle available for personal use?. . . . . . . . . . . . .U res 47a Do you have evidence to support your deduction? . Yes . . . . . . . . . . . . . . . . . No . .U Yes No b If "Yes," is the evidence written? .... Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. CELLPHONE FOR BUSINESS USE 1500 SUITS/UNIFORM 2800 48 Total other expenses. Enter here and on line 27a . . . . . . . . . . . . . . 48 Schedule C (Form 1040 or 1040-SR) 2019