Federal Income tax Q:

Question 1: Annie, a cash method taxpayer, owns a Pho Restaurant in downtown San Antonio. Listening to her business consultant, Annie has formed her restaurant as a 1-member LLC. Annie started her restaurant business in 2015, and so far, it has been performing quite well. In 2020, below are the business items that Annie have forwarded to you. Since Annie have no knowledge in accounting, she just wrote down whatever items that she thinks would be useful for her tax filing. What is Annie's taxable income? Provide detailed explanation and calculation for potential partial credit. Income from the Pho restaurant: $500 k Expenses: Employee salaries: $200 k (4 servers, each $25k, chief = $50k, manager = $50k) o Food materials: $20k. Annie told you that she pays for the food vendor $20k in March 2020. In return, the vendor will provide food to her weekly from then to the end of 2020 and will not charge her weekly charge for each delivery. o Rent: $36k (pay on 06/31/2020. The amount is to pay rent for the next 36 months) Fines paid: $1k. Annie told you that she had to pay $1k fin in 2020 for not having fire extinguisher in the restaurant upon inspection. o Vehicle: $50k. Annie told you that she bought 2 cars for the business in 2020. 14 car is a Honda Accord ($25k) which she used to get to work everyday from her home. 2nd car is a Dodge minivan ($25k) which she used to deliver foods from the restaurant. o Business trip: $10k. According to Annie, every year end, Annie host a fully paid traveling trip for all the restaurant employees. Annie believes that since her salary for the staffs is not that great, the trip is a crucial part to retain employees. Question 1: Annie, a cash method taxpayer, owns a Pho Restaurant in downtown San Antonio. Listening to her business consultant, Annie has formed her restaurant as a 1-member LLC. Annie started her restaurant business in 2015, and so far, it has been performing quite well. In 2020, below are the business items that Annie have forwarded to you. Since Annie have no knowledge in accounting, she just wrote down whatever items that she thinks would be useful for her tax filing. What is Annie's taxable income? Provide detailed explanation and calculation for potential partial credit. Income from the Pho restaurant: $500 k Expenses: Employee salaries: $200 k (4 servers, each $25k, chief = $50k, manager = $50k) o Food materials: $20k. Annie told you that she pays for the food vendor $20k in March 2020. In return, the vendor will provide food to her weekly from then to the end of 2020 and will not charge her weekly charge for each delivery. o Rent: $36k (pay on 06/31/2020. The amount is to pay rent for the next 36 months) Fines paid: $1k. Annie told you that she had to pay $1k fin in 2020 for not having fire extinguisher in the restaurant upon inspection. o Vehicle: $50k. Annie told you that she bought 2 cars for the business in 2020. 14 car is a Honda Accord ($25k) which she used to get to work everyday from her home. 2nd car is a Dodge minivan ($25k) which she used to deliver foods from the restaurant. o Business trip: $10k. According to Annie, every year end, Annie host a fully paid traveling trip for all the restaurant employees. Annie believes that since her salary for the staffs is not that great, the trip is a crucial part to retain employees