Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For several years, Blake owned and operated a financial planning business from his home. It is a sole propriotership reported on schedule C form 1040

For several years, Blake owned and operated a financial planning business from his home. It is a sole propriotership reported on schedule C form 1040 on April 2016, he won a 15000000 lottery and closed his business on April 10, 2016 Blake sold all the items he had been depreciating for his home business.

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.

Advertising $80

Business insurance $685

Business license $100

Comprehensive health insurance $7788

Office supplies $76

Postage $38

Rent $14000

Renters insurance $1055

Second phone for business $103

Tax preparation $350

utilities $ 2281

There was no carry-over of unallowed expenses. There was no section 179 expense deduction taken for any of the assets that were sold April 10, 2016. Depreciation includes bonus depreciation when available. All assets were 100 percent business use.

Item Date in service Basis Prior depreciation

New computer June 15, 2013 $1750 $623

New printer June 15, 2013 $350 $125

Used desk and chair June 15, 2013 $1200 $675

Blake disposed of his business assets in the following manner.

Computer sold for: $220

Printer junked at waste center

Used desk and chair sold for $330

If Blake elects to use actual in home office expenses, what is the amount of his deduction?

A.. 648

B. 743

C.$2576

D..2957

If Blake elects to use office in home simplified method, what is the amount of his scheduled C net profit or loss?

A.$118

B.18

C.(82)

d.(100)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Cost Accounting

Authors: Vanderbeck

13th Edition

0324191693, 978-0324191691

More Books

Students also viewed these Accounting questions

Question

Describe a cost accounting system.

Answered: 1 week ago

Question

Discuss the five steps that can be used to conduct a task analysis

Answered: 1 week ago

Question

Discuss the purpose and advantages of conducting a needs assessment

Answered: 1 week ago