Part II Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising... 8 250 18 Office expense (see instructions).... 18 200 x 9 Car and truck expenses (see 19 Pension and profit-sharing plans . . . . . 19 instructions). 9 2,240 X 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 X 12 Depletion ... 12 21 Repairs and maintenance ... 21 13 Depreciation and section 179 22 Supplies (not included in Part III) . 22 x expense deduction (not included 23 Taxes and licenses. . . 23 x in Part III) (see instructions) 13 24 Travel and meals: 14 Employee benefit programs a Travel .... 24a (other than on line 19)....... 14 b Deductible meals 15 Insurance (other than health) 15 900 (see instructions).. 24b x 16 Interest (see instructions): 25 Utilities... 25 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits) . . . . . 26 x 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 x 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), line 3, and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and 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), line 3, and on Schedule SE, 31 X 32a All investment is at risk. x 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), line 3, and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. 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 32a All investment is at risk. 32b Some investment is not at risk. Schedule C (Form 1040) 2022 Schedule C (Form 1040) 2022 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: a Cost b Lower of cost or market C Other (attach explanation) Page 2 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation . . . . 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation. 36 Purchases less cost of items withdrawn for personal use.. 37 Cost of labor. Do not include any amounts paid to yourself. 38 Materials and supplies.. 39 Other costs.. 40 Add lines 35 through 39. 41 Inventory at end of year. 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4. Part IV Yes No 35 36 37 38 39 40 41 42 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 2022, enter the number of miles you used your vehicle for: a Business b Commuting (see instructions) x x c Other x 45 Was your vehicle available for personal use during off-duty hours?. Do you (or your spouse) have another vehicle available for personal use? . 46 Do you have auidance to sunnart your deduction? 47a Do you have evidence to support your deduction? . b If "Yes," is the evidence written?... Part V Other Expenses. List below business expenses not included on lines 8-26 or line 30. x X 48 Total other expenses. Enter here and on line 27a.. 48 X Schedule C (Form 1040) 2022 Problem 3-1 Schedule C (LO 3.1, 3.3, 3.5, 3.7) Scott Butterfield is self-employed as a CPA. He uses the cash method of accounting, and his Social Security number is 644-47-7833. His principal business code is 541211. Scott's CPA practice is located at 678 Third Street, Riverside, CA 92860. Scott's income statement for the year shows the following: REVENUES Tax Services Accounting Services Other Consulting Services TOTAL REVENUES COST OF SERVICES Income Statement Scott Butterfield, CPA Income Statement 12/31/2022 Current Period 1/1/2022 to 12/31/2022 $76,124 49,081 10,095 135,300 Prior Period 1/1/2021 to 12/31/2021 $75,067 48,860 10,115 134,042 Salaries 35,000 30,100 Payroll Taxes 3,098 2,387 Supplies 1,302 1,548 TOTAL COST OF SERVICES 39,400 34,035 GROSS PROFIT (LOSS) 95,900 100,007 OPERATING EXPENSES Advertising and Promotion 250 350 Business Licenses and Permits 300 250 Charitable Contributions 400 275 Continuing Education 500 300 Dues and Subscriptions 2,800 3,500 Insurance 900 875 Meals and Entertainment 4,400 5,500 Office Expense 200 150 Postage and Delivery 100 50 Printing and Reproduction 50 100 Office Rent 12,000 14,000 Travel Utilities TOTAL OPERATING EXPENSES 900 865 3,000 2,978 25,800 29,193 NET INCOME (LOSS) $70,100 Scott also mentioned the following: The expenses for dues and subscriptions were his country club membership dues for the year. $400 of the charitable contributions were made to a political action committee. $70,814 Scott does not generate income from the sale of goods and therefore does not record supplies and wages as part of cost of goods sold. Scott placed a business auto in service on January 1, 2019 and drove it 4,000 miles for business (equally over the course of the year), 3,250 miles for commuting, and 4,500 miles for nonbusiness purposes. No business expenses for the car are included above. Scott wishes to use the standard mileage method. His wife has a car for personal use. Meals and Entertainment expense includes $2,500 related to golf greens fees for entertaining clients, $1,000 for business meals provided by restaurants, and $900 for the bagels and doughnuts once a month for all employees.