Bob operates his own business called Incredible Investigation , as a calendar year, cash basis, crime fighting consultant. This year’s bob’s business gross receipts were $140,000 and had the following expenses:

 

Advertising	25,000
Liability insurance	10,000
Business license Fees	2,000
Business Travel Expenses	8,000
Bribes to Police department	7,500
Meal with clients	10,000
Office rental	15,000
Professional Crime investigation Association annual membership Fees:	3,000
Independent Contractor payments	15,000
Political contributions to Federal Senate election	10,000
Investigation expenses for purchase of the crime investigation firm	5,000
Investigation expenses for purchase of the elastics company	8,000

 

• Bob uses his car, the Incredible business only.
  • He only has receipts for his gas for 10,000, but not any of the actual expenses.
• He has also kept a contemporaneous record of his 12,500 business miles.
• He investigated 2 business this year, but he didn’t end up purchasing either one.
  • 1 business was a competitor crime investigator firm
  • 2^nd business was an elastics company
• Incredible investigation is a CASH basis taxpayer and rents office space at 195 syndrome Lane, Santa Clara CA,
  • But Bob mainly works in a business use only room as his home office in his home in Sunnyvale
  • The square footage of the room is 400
  • The total square footage of their home is 4,000 sf

What is  Incredible Investigation’s net taxable income BEFORE the Qualified Business Income Deduction?

2. What method did you select to compute Bob’s deductible car expenses and why?
3. Which of the listed expenses is NOT deductible by Incredible Investigation as a business expense?
4. What is the deductible from the expenses of investigation of the crime investigation firm and the elastics company?
5. What is the amount of his deductible meal expenses?
6. What is his home office deduction?