Question

Blake operated as a sole proprietor, reported on Schedule C (Form '10,10). 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:
. Gross receipt: $36,960

'Expenses:

Advertising: $80 .

Business insurance: 9685 .

Business license: $100 .

Comprehensive health insurance (entire year): $7,786 .

Office supplies: $76 .

Postage: $38

Rent {entire year): $'14,400 .

Renter insurance (entire year): $1,055

Second phone line, exclusively for business: $103 .

Tax preparation (allocated to business): $350

Utilities (entire year): $2281.

Blake closed his business on April 1, 2018. He had no carryover losses and all assets were fully depreciated. lf Blake elects
to use the office-in-home (OlH) simplified method, what is the amount of his Schedule C net profit or loss?

A. $34,515; B. 34,818; C. 35153; D. 37,674

Answer 1

Calculate the amount of Blake's Schedule C net profit or loss as follows: 36,960 80 685 100 76 Gross receipts Expenses: Advertising Business insurance Business license Office supplies Postage Business phone line Tax preparation Home office expense ($300 x 5)/(12 x 3) Total expenses Net profit 38 103 350 375 1,807 35.153 Therefore, Blake's Schedule C net profit is $35,153. The correct answer is C.