Review the following scenario. Use the information provided to answer questions about the taxpayers 2020 return. Makayla Jennings (34) is filing as a single taxpayer. During the year, she earned $53,000 in wages from her job as a high-school English teacher. Makayla has always been an avid reader, and in addition to her teaching job, she had an opportunity in early 2020 to lead a book club at a nearby community center. Makayla led the book club from early January until March 19, 2020, when the center closed due to COVID-19 restrictions. The community center paid Makayla for her work, and in early 2021, she received a Form 1099-NEC reporting $510 for nonemployee compensation in box 1. The community center is within walking distance of Makaylas home, so she did not have any vehicle or travel expenses. Her only business-related expense was for $50 in supplies. Makayla had no other income during the year.

Question 13

What amount should Makayla report as profit or loss from business? You may refer to her partially completed Schedule C, Profit or Loss from Business, which is shown below, to assist you in answering this question.

JOS. SU UCLOTS TO oro was reported 10 1 2 3 4 5 6 7 8 9 10 11 24b Form W-2 and the "Statutory employee" box on that form was checked 2 Retums and allowances 3 Subtract line 2 from line 1 4 Cost of goods sold (from line 42) 5 Gross profit. Subtract line 4 from line 3.... 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 7 Gross Income. Add lines 5 and 6.. Part 11 Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising.... 18 Office expense (see instructions) 18 9 Car and truck expenses (see 19 Pension & profit-sharing plans. 19 instructions).. 20 Rent or lease (see instructions): 10 Commissions and fees. a Vehicles, machinery, and equipment 20a 11 Contract labor (sce instructions) b Other business property..... 20b 12 Depletion...... 12 21 Repairs and maintenance .... 21 13 Depreciation and section 179 22 Supplies (not included in Part I)... 22 expense deduction (not 23 Taxes and licenses 23 included in Part III) (sce instr.).. 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 (see instructions) 16 Interest (see instructions): 25 Utilities 25 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits)... 26 b Other.. 16b 27 a 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 fllers 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 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 32a All investment is at risk. Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates 32b Some investment is not and trusts, enter on Form 1041, line 3. 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. Schedule C (Form 1040) 2020 FDA 20 C1 BWF 1040 Form Software Copyright 1996 - 2021 HRB Tax Group, Inc. 30 31 $0 $425 $460 $510