Question
Caroline Taxpayer, a business consultant who owns and operates her own unincorporated business,, uses the cash method of accounting and reports her income on a
Caroline Taxpayer, a business consultant who owns and operates her own unincorporated business,, uses the cash method of accounting and reports her income on a calendar year basis. She has provided you with the following information concerning her financial affairs during the current calendar year and asks you to compute her tax liability:
Caroline paid state and local general sales taxes of $3,000 on the purchase of various items for personal use or consumption. She paid real property taxes of $5,000 on her home. She also paid $14,000 in estimated state income taxes and $40,000 in estimated federal income taxes with respect to her business.
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