2. The TPs sole proprietorship had the following revenues and expenses during 2020:

• Sales Revenue $484,000
• Sales Returns $ 17,000
• Cost of Goods Sold $160,000
• Interest Expense on business loan $ 4,000
• Car/Truck Expense (repairs, gas, oil, etc.) $ 8,300
• Taxes and licenses $ 18,300
• Depreciation $ 9,500
• Utilities $ 3,500
• Wages to sales staff $110,000
• Fee paid to CPA for Schedule C $ 1,000

The net profit for the sole proprietorship would be $____________________, and it would be reported on _____________________.

a. $154,600, Schedule C, Line 31.

b. $154,600, Schedule C, Line 5.

c. $152,400, Schedule C, Line 31.

d. $152,400, Schedule C, Line 5.

3. NOTE: Because the OASDI limit increased to $137,700 for 2020, you must change Line 5 on Schedule SE to the following:

5. Self-employment tax. If the amount on line 4 is:

• $137,700 or less, multiply line 4 by 15.3% (0.153). Enter the result here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55.
• More than $137,700, multiply line 4 by 2.9% (0.029). Then, add $17,074.80 to the result. Enter the total here and on Schedule 2 (Form 1040 or 1040-SR), line 4, or Form 1040-NR, line 55.

Based on the information contained in Question 2 above, the only correct entry for the TP to report based on the following choices would be:

a. $10,578 on Schedule 1, Line 14.

b. $16,480 on Schedule SE, Line 5.

c. $10,310 on Schedule SE, Section A, Line 6.

d. $10,450 on Schedule 1, Line 14.

Please answer Question #3. Question #2 is already answered correctly.