James Arnold is the sole proprietor of an internet business (Handy Hints) that provides handyman advice and tips for do-it-yourself home improvement projects. The site also serves as a portal for those looking for reputable contractors that provide a wide variety of home repair services. James has also compiled his work in an e-book that is sold via his website. His business is located at 340 Gentry Dr. Stillwater, OK 74078. James s Social Security number is 123-45-6789. His Employer Identification Number is 05-9987561 and his principal business code is 541990. James uses the cash method of accounting. For the current year, he has the following revenue and expenses:

Revenue from advertising on his site $ 45,000

Revenue from referrals 27,450

Revenue from book sales 8,700

Home improvement conference registration fees 4,500

Travel to conferences 1,250

Hotels 420

Meals 190

Accounting fees 1,200

Insurance expense 1,850

Legal fees 625

Office supplies 240

Advertising on other websites 4,000

James uses his truck for both business and personal purposes. The truck cost $40,500 on June 20, 2019. James pays $25,500 in cash and finances the balance through the dealer. He drives the truck 7,500 miles for business and drives a total of 15,000 miles during the year for personal purposes and commuting. He keeps records of all miles. The total expenses for the automobile are: repairs and maintenance of $360, insurance of $2,000 (due to several speeding tickets); gasoline of $2,455, and depreciation of $2,300. $1,000 in interest was paid on the loan on the car. James spouse has her own car and James has written documentation to support all costs.

Instructions:

Complete Schedule C (Profit or Loss From Business) and Schedule SE (Self-Employment Tax). You must include a Schedule C and Schedule SE Excel attachment that shows how any combined lines are calculated. The attachment will be graded along with the forms. For example, if you put more than one item in the supplies line, you need to show the name of the line and them itemize what goes in to the total included on that line. In addition, you must compute auto expense using both methods and show the calculations for each on your attachment. Forms and instructions can be downloaded from the IRS web site http://www.irs.gov/formspub/index.html or by googling the form name. You can also find fill-in forms online. You will want to download the IRS instructions for each form and read along line by line as you work your forms. You should also use your book to look up how things are calculated.