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This activity aims to provide practical experience in preparing tax forms related to business income and depreciation. It emphasizes the importance of accurate reporting and adherence to tax regulations.

Instructions:

Gather Information: Review the provided financial data for John Williams, including $$250,000$ in sales and $$110,000$ in expenses. Take note of the purchase of office furniture, a $7-$year property, costing $$12,500,$ placed in service on $7/1/2021.$

Complete Form $4562-$ Depreciation and Amortization:

Enter John Williams' personal information at the top of the form.

In Part I, Section A$,$ report the cost of the office furniture and its description. Specify that it is a $7-$year property.

In Section B$,$ select the General Depreciation System $($GDS$)$ and the half$-$year convention.

Calculate the depreciation for the office furniture using the appropriate depreciation rate.

Schedule C $-$ Profit or Loss From Business:

Transfer the relevant information from Form $4562$ to Schedule C$.$

In Part I, report John Williams' business income by subtracting the total expenses from the total sales.

Include the depreciation expense in the appropriate line on Schedule C$.$

Double$-$Check and Verify: Ensure that all figures are accurate, and calculations align with the IRS guidelines for depreciation and business expenses.

 

Answer rating: 100% (QA)

Activity Preparing Tax Forms for Business Income and Depreciation The activity focuses on practical experience in preparing tax forms related to business income and depreciation highlighting the signi... View the full answer