Schedule C - Profit or Loss From Business Stan, a benefits analyst, 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, Stan decided he would finally do it. Stan put his business plan together and, on January 1 of this year, Stan opened his doors for business as a sole proprietorship called Stan-Ben (SB). Stan reported the following financial information for the year (assume SB reports on a calendar year). 1. In January, SB rented a small business office about 12 miles from Stan's home. SB paid $13,600, which represented a damage deposit of $5,440 and rent for two years ($4,080 annually). 2. SB earned and collected $350,000 performing benefits-related services and selling its specialized software tool to clients. 3. SB purchased some new equipment in February for $48,500. It claimed depreciation on these assets under tax basis during the year in the amount of $7,440. 4. SB paid Stan's father $12,400 for services that would have cost no more than $7,130 if Stan had hired any other local business to perform the services. While Stan's dad was competent, he does not command such a premium from his other clients. 5. In an attempt to get his name and new business recognized, SB paid $7,600 for a one-page ad in the Human Resource Register. It also paid $16,200 in radio ads to be run through the end of December. 6. SB leased additional office space in a building downtown. SB paid rent of $30,000 for the year. 7. In November, Stan's office was broken into and equipment valued at $5,600 was stolen. The tax basis of the equipment was $6,100. Stan received $2,240 of insurance proceeds from the theft. 8. SB incurred a $4,300 fine from the state government for certain signage. 9. SB contributed $3,240 to lobbyists for their help in persuading the state government to change legislation. 10. On July 1, SB paid $1,800 for an 18-month insurance policy for its business equipment. The policy covers the period July 1 of this year through December 31 of next year. 11. Stan lives 12 miles from the office. He carefully tracked his mileage and drove his SUV 6,280 miles between the office and his home. He also drove an additional 7,200 miles between the office and traveling to client sites. Stan did not use the SUV for any other purposes. He did not keep track of the specific expenses associated with the SUV. However, while traveling to a client site, Stan received a $210 speeding ticket. SB reimbursed Stan for business mileage and for the speeding ticket. 12. SB purchased two season tickets (20 games) to attend State U baseball games for a total of $1,340. Stan took existing and prospective clients to the games to maintain contact and find further work. This was very successful for Stan as SB gained many new projects through substantial discussions with the clients following the games. 13. SB paid $3,740 for meals when sales employees met with prospective clients. 14. SB had a client who needed Stan to perform work in Florida. Because Stan had never been to Florida before, he booked an extra day and night for sightseeing. Stan spent $520 for airfare and booked a hotel for three nights ($180/night). (Stan stayed two days for business purposes and one day for personal purposes.) He also rented a car for $105 per day. The client arranged for Stan's meals while Stan was doing business, but SB paid all expenses. 15. SB paid a total of $22,000 of wages to employees during the year and cost of goods sold was $27,000.