Timothy Tim and Kathleen Kate Moser live at 38 Ettie Dr, Millville, NJ 08332. Please use the information contained herein to prepare a Schedule C as well as other forms related to the business. Also, at the end, they have a question about claiming their daughter. Please draft a cover letter sending them the forms related to the business and advising them on their question regarding a dependent. PART 1 Tim is self-employed as an engineer and uses the cash basis of accounting for tax reporting. His business is organized as a limited liability company called TM & Associates Engineering, LLC He invoiced various clients $197,000 but only $173,000 was received in 2021. On April 1, 2021, Tim paid Richard Marmom, CPA $1250 for the preparation of Tim & Kates 2020 income tax return. The check was written from the TM & Associates Engineering, LLC checking account and $675 of the fee was related to the preparation of TM & Associates Engineering, LLC business forms. The business had advertising on the internet and in construction trade magazines that cost $28,000. All of these fees were paid in 2021. The business spent a total of $15,647 on paper, ink, copier toner, and other miscellaneous office supplies. The business rented surveying equipment for $10,000 plus $687.50 sales tax for a total of $10,687.50. Tim travelled to an engineering convention in Orlando, FL. The convention included continuing education which is required for his license. The convention was Monday-Wednesday. He flew to Orlando on Friday and returned on Thursday. The expenses incurred are as follows: 1. Airfare: $650 2. Hotel: $900 3. Taxi to and from the airport in Orlando: $75 4. Meals: $300 5. Cost to attend conference (including continuing education): $1250 Tim (through the business) hired Dewey Cheatem & Howe, attorneys at law to review his contracts with clients. The total fees for the year were $1500. There was a larger job and additional assistance was needed in reviewing the plans so the business engaged C&S Engineers to review the plans. The total fee paid was $2850. The business exclusively used a 15 x 15 office in Tim and Kates 2400 square foot home. Tim elected to use the simplified safe harbor method for deducting home office expenses.

Tim used his 2018 F-150 pickup truck to meet with clients and for other business needs. The truck was driven a total of 15,473 miles during 2021 and 3,541 of those miles were for business purposes. Tim kept a meticulous mileage log. Kates car was also available for personal use. Tim uses the standard mileage rate for deducting the use of his truck. Tim also paid parking fees of $55 and Tolls of $50 during the business use of the truck. Tim wrote a check in the amount of $400 from TM & Associates Engineering, LLC to Big Brothers/Big Sisters of Cumberland County on July 31, 2021. Big Brothers/Big Sisters is a 501(c)3 charity. Tim received a letter acknowledging the contribution and stating that no goods or services were received in exchange for the contribution. Tim wrote a check in the amount of $1,000 from TM & Associates Engineering, LLC to Millville Little League Baseball on March 1, 2021. This organization is a 501(c)3 charity. In exchange for this contribution, TM & Associates Engineering, LLC receives a banner with the business name in the baseball field for the entire season. The fair market value is equal to the amount paid. In order to thank three of his largest clients for their business, Tim (through the business) purchased fruit baskets for a total of $89.85 and gave them to the three clients in December 2021. TM & Associates Engineering, LLC paid $850 to renew Tims NJ Professional Engineer license on June 30, 2021. TM & Associates Engineering, LLC paid $750 for professional liability insurance on March 31, 2021. On December 30, 2021, the business purchased a blueprint machine for $3,317 including tax. This machine was placed in service that day. Tim decided not to use any Section 179 deduction for this piece of equipment. Tim decided to have the business elect out of bonus depreciation for all classes of assets placed in service during the year. All other assets have been fully depreciated prior to the beginning of 2021.