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: Income Statement Scott Butterfield, CPA Income Statement 12/31/2019 Current Period 1/1/2019 to 12/31/2019 Prior Period 1/1/2018 to 12/31/2018 $76,123.00 49,001.00 $75,067.00 48,860.00 10,115.00 10,095.00 135,219.00 134,042.00 32,000.00 2,868.00 1,391.00 30,100.00 2,387.00 1.548.00 REVENUES Tax Services Accounting Services Other Consulting Services TOTAL REVENUES COST OF SERVICES Salaries Payroll Taxes Supplies TOTAL COST OF SERVICES GROSS PROFIT (LOSS) OPERATING EXPENSES Advertising and Promotion Business Licenses and Permits Charitable contributions Continuing Education Dues and Subscriptions Insurance 36,259.00 98,960.00 34,035.00 100,007.00 300.00 250.00 425.00 300.00 3,500.00 350.00 250.00 275.00 300.00 3,500.00 875.00 875.00 Meals and Entertainment Office Expense 4,400.00 150.00 5,500.00 150.00 350.00 250.00 OPERATING EXPENSES Advertising and Promotion Business Licenses and Permits Charitable Contributions Continuing Education Dues and Subscriptions Insurance Meals and Entertainment Office Expense Postage and Delivery Printing and Reproduction Office Rent Travel Utilities TOTAL OPERATING EXPENSES 300.00 250.00 425.00 300.00 3,500.00 875.00 4,400.00 150.00 50.00 100.00 14,000.00 275.00 300.00 3,500.00 875.00 5,500.00 150.00 50.00 100.00 14,000.00 865.00 865.00 2.978.00 2,978.00 29,193.00 28,193.00 NET INCOME (LOSS) $70,767.00 $70,814.00 Scott also mentioned the following: The expenses for dues and subscriptions were his country club membership dues for the year. $300 of the charitable contributions were made to a political action committee. 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, 2016 and drove it 3,792 miles for business, 3,250 miles for commuting, and 4,500 miles for nonbusiness purposes. His wife has a car for personal use. He maintains written records for the business use of the car. Complete Schedule C for Scott showing Scott's net taxable profit from self- employment. Assume Scott has evidence to support his deductions. If required, only use the minus sign to indicate a net loss. When required, round amounts to the nearest dollar. Did you "materially participate in the operation of this business during 2019? If "No," see instructions for limit on losses If you started or acquired this business during 2019, check here .... Yes No Did you make any payments in 2019 that would require you to file Form(s) 1099? (see instructions) ..... If "Yes," did you or will you file required Forms 1099? ... Yes No Income Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was 1 checked... Returns and allowances .. 135,219. Subtract line 2 from line 1.. 135,219. Cost of goods sold (from line 42).. Gross profit. Subtract line 4 from line 3..... 135,219. Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) .... Gross income. Add lines 5 and 6.. 135,219. til Expenses. Enter expenses for business use of your home only on line 30. "art II 9 20a 11 20b 12 21 22 23 2,637 X 13 Expenses. Enter expenses for business use of your home only on line 30. Advertising 300.00 18 office expense (see instructions) .... 18 150.00 x 9 Car and truck expenses (see 19 Pension and profit-sharing plans.... 19 instructions). 2,067 x 20 Rent or lease (see instructions): . 10 Commissions and fees. 10 a Vehicles, machinery, and equipment.. 11 Contract labor (see instructions) bother business property. 14,000.0 12 Depletion 21 Repairs and maintenance 13 Depreciation and section 179 22 Supplies (not included in Part III)... 1,391.00 expense deduction (not included in Part III) 23 Taxes and licenses. (see instructions) 24 Travel and meals: 14 Employee benefit programs a Travel... (other than on line 19).... b Deductible meals 15 Insurance (other than health) 875.00 (see instructions). 16 Interest (see instructions): 25 Utilities 25 2,978.00 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits). 26 30,100 x b Other 16b 27a Other expenses (from line 48). 300 x 17 Legal and professional services b Reserved for future use 27b Total expenses before expenses for business use of home. Add lines 8 through 27a ... Tentative profit or (loss). Subtract line 28 from line 7... 24a 865.00 14 15 24b 27a 17 28 29 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 28 28 Total expenses before expenses for business use of home. Add lines 8 through 27a ..... Tentative profit or (loss). Subtract line 28 from line 7.. 29 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. 31 If a profit, enter on both Schedule 1 (Form 1040 or 1040- SR), line 3 (or Form 1040-NR, line 13) 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 32aAll investment in this activity (see instructions). at risk. If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) 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. 32b Some investment is not at risk. If "Yes," is the evidence written? .... Yes Other Expenses. List below business expenses not included on lines 8-26 or -artv line 30. Charitable contributions 300 x Continuing education Printing 300 100 Total other expenses. Enter here and on line 27a .... 48 48 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: Income Statement Scott Butterfield, CPA Income Statement 12/31/2019 Current Period 1/1/2019 to 12/31/2019 Prior Period 1/1/2018 to 12/31/2018 $76,123.00 49,001.00 $75,067.00 48,860.00 10,115.00 10,095.00 135,219.00 134,042.00 32,000.00 2,868.00 1,391.00 30,100.00 2,387.00 1.548.00 REVENUES Tax Services Accounting Services Other Consulting Services TOTAL REVENUES COST OF SERVICES Salaries Payroll Taxes Supplies TOTAL COST OF SERVICES GROSS PROFIT (LOSS) OPERATING EXPENSES Advertising and Promotion Business Licenses and Permits Charitable contributions Continuing Education Dues and Subscriptions Insurance 36,259.00 98,960.00 34,035.00 100,007.00 300.00 250.00 425.00 300.00 3,500.00 350.00 250.00 275.00 300.00 3,500.00 875.00 875.00 Meals and Entertainment Office Expense 4,400.00 150.00 5,500.00 150.00 350.00 250.00 OPERATING EXPENSES Advertising and Promotion Business Licenses and Permits Charitable Contributions Continuing Education Dues and Subscriptions Insurance Meals and Entertainment Office Expense Postage and Delivery Printing and Reproduction Office Rent Travel Utilities TOTAL OPERATING EXPENSES 300.00 250.00 425.00 300.00 3,500.00 875.00 4,400.00 150.00 50.00 100.00 14,000.00 275.00 300.00 3,500.00 875.00 5,500.00 150.00 50.00 100.00 14,000.00 865.00 865.00 2.978.00 2,978.00 29,193.00 28,193.00 NET INCOME (LOSS) $70,767.00 $70,814.00 Scott also mentioned the following: The expenses for dues and subscriptions were his country club membership dues for the year. $300 of the charitable contributions were made to a political action committee. 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, 2016 and drove it 3,792 miles for business, 3,250 miles for commuting, and 4,500 miles for nonbusiness purposes. His wife has a car for personal use. He maintains written records for the business use of the car. Complete Schedule C for Scott showing Scott's net taxable profit from self- employment. Assume Scott has evidence to support his deductions. If required, only use the minus sign to indicate a net loss. When required, round amounts to the nearest dollar. Did you "materially participate in the operation of this business during 2019? If "No," see instructions for limit on losses If you started or acquired this business during 2019, check here .... Yes No Did you make any payments in 2019 that would require you to file Form(s) 1099? (see instructions) ..... If "Yes," did you or will you file required Forms 1099? ... Yes No Income Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was 1 checked... Returns and allowances .. 135,219. Subtract line 2 from line 1.. 135,219. Cost of goods sold (from line 42).. Gross profit. Subtract line 4 from line 3..... 135,219. Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) .... Gross income. Add lines 5 and 6.. 135,219. til Expenses. Enter expenses for business use of your home only on line 30. "art II 9 20a 11 20b 12 21 22 23 2,637 X 13 Expenses. Enter expenses for business use of your home only on line 30. Advertising 300.00 18 office expense (see instructions) .... 18 150.00 x 9 Car and truck expenses (see 19 Pension and profit-sharing plans.... 19 instructions). 2,067 x 20 Rent or lease (see instructions): . 10 Commissions and fees. 10 a Vehicles, machinery, and equipment.. 11 Contract labor (see instructions) bother business property. 14,000.0 12 Depletion 21 Repairs and maintenance 13 Depreciation and section 179 22 Supplies (not included in Part III)... 1,391.00 expense deduction (not included in Part III) 23 Taxes and licenses. (see instructions) 24 Travel and meals: 14 Employee benefit programs a Travel... (other than on line 19).... b Deductible meals 15 Insurance (other than health) 875.00 (see instructions). 16 Interest (see instructions): 25 Utilities 25 2,978.00 a Mortgage (paid to banks, etc.) 16a 26 Wages (less employment credits). 26 30,100 x b Other 16b 27a Other expenses (from line 48). 300 x 17 Legal and professional services b Reserved for future use 27b Total expenses before expenses for business use of home. Add lines 8 through 27a ... Tentative profit or (loss). Subtract line 28 from line 7... 24a 865.00 14 15 24b 27a 17 28 29 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 28 28 Total expenses before expenses for business use of home. Add lines 8 through 27a ..... Tentative profit or (loss). Subtract line 28 from line 7.. 29 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. 31 If a profit, enter on both Schedule 1 (Form 1040 or 1040- SR), line 3 (or Form 1040-NR, line 13) 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 32aAll investment in this activity (see instructions). at risk. If you checked 32a, enter the loss on both Schedule 1 (Form 1040 or 1040-SR), line 3 (or Form 1040-NR, line 13) 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. 32b Some investment is not at risk. If "Yes," is the evidence written? .... Yes Other Expenses. List below business expenses not included on lines 8-26 or -artv line 30. Charitable contributions 300 x Continuing education Printing 300 100 Total other expenses. Enter here and on line 27a .... 48 48