INCOME TAX RETURN PROBLEM Below is the taxpayer information for Beverly Johnson: Beverly (SS# 138-09-1983, date of birth: April 2, 1968) is a self-employed consultant whose business uses the accrual method of accounting. Her principal business code is 540700. Her business is located at 1501 Broadway, New York, N.Y., 10019. During the year, she had the following income and expense items: Income Professional Fees Earned $250,000 Expenses Office Expenses Depreciation Rent on Office Space Advertising Malpractice Insurance Utilities Travel (950 business miles driven) Taxes & Licenses Salary for her bookkeeper Meals & Entertainment Supplies Accounting Fees Legal Fees Interest on Bank Loan Cellphone for biz usage Suits/Uniform $ 5,413 $ 15,250 $ 30,500 $ 7,577 $ 6,000 $ 5,552 ? $5,500 $15,550 $ 13,050 $ 5,685 $9,765 $10.250 $4,550 $1,500 $2,800 REQUIRED: Please prepare the Schedule C (see attachment) for Beverly Johnson SCHEDULE C Profit or Loss From Business OMB No. 1545-0074 (Form 1040 or 1040-SR) (Sole Proprietorship) 2019 Department of the Treasury Go to www.lrs.gov/Schedule for instructions and the latest information. Attachment Interral Revenue Service (69) Attach to Form 1040, 1040-SR, 1040-NR, or 1041; partnerships generally must file Form 1065. Sequence No. 09 Name of proprietor Social security number (SSN) A Principal business or profession, including product or service (see instructions) B Enter code from instructions Business name. If no separate business name, leave blank. D Employer ID number (EIN) (see instr.) DAWN 6 E Business address (including suite or room no.) City, town or post office, state, and ZIP code F Accounting method: (1) Cash (2) Accrual (3) Other (specify) G Did you "materially participate in the operation of this business during 2019? If "No," see instructions for limit on losses Yes No H If f you started or acquired this business during 2019, check here ...... 1 Yes Did you make any payments in 2019 that would require you to file Form(s) 1099? (see Instructions) No J If "Yes," did you or will you file required Forms 1099? Yes No Part I Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 1 2 Returns and allowances. 2 3 Subtract line 2 from line 1 3 4 Cost of goods sold (from line 42) 4 5 Gross profit. Subtract line 4 from line 3 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 7 Gross income. Add lines 5 and 6 7 Part II Expenses. Enter expenses for business use of your home only on line 30. Advertising .... 8 18 Office expense (see instructions) 18 9 9 Car and truck expenses (see 19 Pension and profit-sharing plans 19 instructions) 9 20 Rent or lease (see instructions): 10 Commissions and fees 10 a Vehicles, machinery, and equipment 20a 11 Contract labor (see instructions) 11 b Other business property.. 20b 12 Depletion ..... 12 21 Repairs and maintenance 21 13 Depreciation and section 179 22 Supplies (not included in Part III) 22 expense deduction (not included in Part III) (see 23 Taxes and licenses . 23 13 24 Travel and meals: 14 Employee benefit programs a Travel 24a (other than on line 19) 14 b Deductible meals (see 15 Insurance (other than health) 15 instructions).. 24b 16 Interest (see instructions) 25 Utilities - 25 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits) 26 b Other 16b 27a Other expenses (from line 48) 27a 17 Legal and professional services 17 b Reserved for future use 27b 28 Total expenses before expenses for business use of home. Add lines 8 through 27a. 28 29 Tentative profit or loss). Subtract line 28 from line 7.......... 29 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30... 30 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and 31 trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. 32 If you have a loss, check the box that describes your investment in this activity (see instructions). If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 32a All investment is at risk. 31 instructions). Estates and trusts, enter on Form 1041, line 3. 326 Some Investment is not at risk. If you checked 32b, you must attach Form 6198. Your loss may be limited. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No, 11334P Schedule C (Form 1040 or 1040-SR) 2019 instructions) ****** Page 2 Schedule C (Form 1040 or 1040-SR) 2019 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: a Cost b Lower of cost or market Other (attach explanation) Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation. Yes 34 No 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation. 35 36 Purchases less cost of items withdrawn for personal use. 36 37 Cost of labor. Do not include any amounts paid to yourself. 37 38 Materials and supplies 38 39 Other costs. 39 40 Add lines 35 through 39. .. 40 41 Inventory at end of year... 41 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 ... 42 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562 43 When did you place your vehicle in service for business purposes? (month, day, year) / / 44 Of the total number of miles you drove your vehicle during 2019, enter the number of miles you used your vehicle for: Business b Commuting (see instructions) c Other 45 Was your vehicle available for personal use during off-duty hours? ? Yes No 46 Do you (or your spouse) have another vehicle available for personal use? Yes No 47a Do you have evidence to support your deduction? Yes No Yes No If "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040 or 1040-SR) 2019 INCOME TAX RETURN PROBLEM Below is the taxpayer information for Beverly Johnson: Beverly (SS# 138-09-1983, date of birth: April 2, 1968) is a self-employed consultant whose business uses the accrual method of accounting. Her principal business code is 540700. Her business is located at 1501 Broadway, New York, N.Y., 10019. During the year, she had the following income and expense items: Income Professional Fees Earned $250,000 Expenses Office Expenses Depreciation Rent on Office Space Advertising Malpractice Insurance Utilities Travel (950 business miles driven) Taxes & Licenses Salary for her bookkeeper Meals & Entertainment Supplies Accounting Fees Legal Fees Interest on Bank Loan Cellphone for biz usage Suits/Uniform $ 5,413 $ 15,250 $ 30,500 $ 7,577 $ 6,000 $ 5,552 ? $5,500 $15,550 $ 13,050 $ 5,685 $9,765 $10.250 $4,550 $1,500 $2,800 REQUIRED: Please prepare the Schedule C (see attachment) for Beverly Johnson SCHEDULE C Profit or Loss From Business OMB No. 1545-0074 (Form 1040 or 1040-SR) (Sole Proprietorship) 2019 Department of the Treasury Go to www.lrs.gov/Schedule for instructions and the latest information. Attachment Interral Revenue Service (69) Attach to Form 1040, 1040-SR, 1040-NR, or 1041; partnerships generally must file Form 1065. Sequence No. 09 Name of proprietor Social security number (SSN) A Principal business or profession, including product or service (see instructions) B Enter code from instructions Business name. If no separate business name, leave blank. D Employer ID number (EIN) (see instr.) DAWN 6 E Business address (including suite or room no.) City, town or post office, state, and ZIP code F Accounting method: (1) Cash (2) Accrual (3) Other (specify) G Did you "materially participate in the operation of this business during 2019? If "No," see instructions for limit on losses Yes No H If f you started or acquired this business during 2019, check here ...... 1 Yes Did you make any payments in 2019 that would require you to file Form(s) 1099? (see Instructions) No J If "Yes," did you or will you file required Forms 1099? Yes No Part I Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 1 2 Returns and allowances. 2 3 Subtract line 2 from line 1 3 4 Cost of goods sold (from line 42) 4 5 Gross profit. Subtract line 4 from line 3 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 7 Gross income. Add lines 5 and 6 7 Part II Expenses. Enter expenses for business use of your home only on line 30. Advertising .... 8 18 Office expense (see instructions) 18 9 9 Car and truck expenses (see 19 Pension and profit-sharing plans 19 instructions) 9 20 Rent or lease (see instructions): 10 Commissions and fees 10 a Vehicles, machinery, and equipment 20a 11 Contract labor (see instructions) 11 b Other business property.. 20b 12 Depletion ..... 12 21 Repairs and maintenance 21 13 Depreciation and section 179 22 Supplies (not included in Part III) 22 expense deduction (not included in Part III) (see 23 Taxes and licenses . 23 13 24 Travel and meals: 14 Employee benefit programs a Travel 24a (other than on line 19) 14 b Deductible meals (see 15 Insurance (other than health) 15 instructions).. 24b 16 Interest (see instructions) 25 Utilities - 25 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits) 26 b Other 16b 27a Other expenses (from line 48) 27a 17 Legal and professional services 17 b Reserved for future use 27b 28 Total expenses before expenses for business use of home. Add lines 8 through 27a. 28 29 Tentative profit or loss). Subtract line 28 from line 7.......... 29 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30... 30 31 Net profit or loss). Subtract line 30 from line 29. If a profit, enter on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and 31 trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. 32 If you have a loss, check the box that describes your investment in this activity (see instructions). If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 32a All investment is at risk. 31 instructions). Estates and trusts, enter on Form 1041, line 3. 326 Some Investment is not at risk. If you checked 32b, you must attach Form 6198. Your loss may be limited. For Paperwork Reduction Act Notice, see the separate instructions. Cat. No, 11334P Schedule C (Form 1040 or 1040-SR) 2019 instructions) ****** Page 2 Schedule C (Form 1040 or 1040-SR) 2019 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: a Cost b Lower of cost or market Other (attach explanation) Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation. Yes 34 No 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation. 35 36 Purchases less cost of items withdrawn for personal use. 36 37 Cost of labor. Do not include any amounts paid to yourself. 37 38 Materials and supplies 38 39 Other costs. 39 40 Add lines 35 through 39. .. 40 41 Inventory at end of year... 41 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 ... 42 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562 43 When did you place your vehicle in service for business purposes? (month, day, year) / / 44 Of the total number of miles you drove your vehicle during 2019, enter the number of miles you used your vehicle for: Business b Commuting (see instructions) c Other 45 Was your vehicle available for personal use during off-duty hours? ? Yes No 46 Do you (or your spouse) have another vehicle available for personal use? Yes No 47a Do you have evidence to support your deduction? Yes No Yes No If "Yes," is the evidence written? Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. 48 Total other expenses. Enter here and on line 27a 48 Schedule C (Form 1040 or 1040-SR) 2019