Liam, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year's resolution, Liam decided he would finally do it. Liam put his business plan togetheand, on January 1 of this year, Liam opened his doors for business called Liam Geo Net LGN Liam Geo Net will use the accrual method of accounting and will be use the calendar year (Schedule C).. Liam reported the following financial information for the year. What is Liam's Schedule C income (Revenues and Expenses) for the year? In January LGN rented a small business office about 12 miles from Liam's home. LGN paid S10,000 which represented a damage deposit of S4,000 and rent for two years (S3,000 annually) LGN earned and collected S290,000 performing geological-related services and selling its specialized digging tool LGN paid S7,000 to buy luxury season tickets for Liam's parents for State U. football games. LGN paid Liam's father S10,000 for services that would have cost no more than S6,000 if Liam had hired any other local business to perform the services. premium from his other clients. In December, LGN agreed to a 12-month S8,000 contract with Advertise-With-Us (AWU) to produce a radio ad campaign. LGN paid S3,000 up front in December of this year) and AWU agreed that LGN would owe the remaining S5,000 only if LGN's sales increased by 15 percent over the nine-month period after the contract was signed a. b. c. d. While Liam's dad was competent, he does not command such a e. f. LGNleased additional office space in a building downtown. LGN paid rent of $27,000 for the year. g. One of his clients-HRU was so impressed with the specialized digging tools that it purchased in March that it wanted to contract with LGN to continue to produce the tools for them for the next three years. HRU paid LGN S216,000 (S120 per tool) on October 30 of this year, to produce 50 tools per month for 36 months beginning on November 1 of this year. LGN delivered 50 tools on November 30 and again on December 30. LGN elects to use the deferral method to account for the transaction. In November, Liam's office was broken into and equipment valued at S5,000 was stolen. The tax basis of the equipment was S5,500. Liam received S2,000 of insurance proceeds from the theft. LGN incurred a S4,000 fine from the state government for digging in an unauthorized digging zone. h. i, j. LGN contributed S3,000 to help lobbyists for their help in persuading the state government to authorize certain k. On July 1, LGN paid S1,800 for an 18-month insurance policy for its business equipment. The policy covers . Liam lives 12 miles from the office. He carefully tracked his mileage and drove his truck 6,280 miles between unauthorized digging zones. the period July lof this year through December 31 of next year the office and his home. He also drove an additional 7,200 miles between the office and traveling to client sites. Liam did not use the truck for any other purposes. He did not keep track of the specific expenses associated with the truck. However, while traveling to a client site, Liam received a $150 speeding ticket. m. LGN purchased two season tickets (20 games) to attend State U baseball games for a total of $1,100. Liam took existing and prospective clients to the games to maintain contact and discuss current and potential work. This was very successful for Liam as LGN gained many new projects through substantial discussions with the clients following the games. n LGN had a client who needed Liam to perform work in Florida. Because Liam had never been to Florida before, he booked an extra day and night for sightseeing. Liam spent $400 for airfare and booked a hotel for 3 nights (S120ight). (Liam stayed two days for business purposes and one day for personal purposes.) He also rented a car for S45 per day. The client arranged for Liam's mels while Liam was doing business. LGN reimbursed Liam for all expenses o. LGN paid a total of S10,000 of wages to employees during the year and cost of goods sold was S15,000 Business Income Treatment