Question
Melody owns and operates a gift shop. In 2020, she withdrew $1,850 of her inventory as gifts for her family. She did not pay $1,850
Melody owns and operates a gift shop. In 2020, she withdrew $1,850 of her inventory as gifts for her family. She did not pay $1,850 to the business. How should Melody report this "personal use" withdrawal?
A)As a deduction in calculating Cost of Goods Sold on Part III of Schedule C (Form 1040).
B)As an "Other Expense" on line 27a of Schedule C (Form 1040).
C)As a deduction from "Gross Receipts" on line 1 of Schedule C (Form 1040).
D)Melody does not need to report this. It is a gift from the business, and gifts are not taxable income.
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
9781266566899
