69.. Select the correct option (there is only one) for parts a. to g., thus answering all questions. Do not provide an explanation.

a. Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. He also had two personal exemptions for a total of $8,000. If Joe recovers any part of the $300, in any future year, what amount will he will report as income?

i. $0

ii. $50

iii. $100

iv. $200

b. When determining whether an individual is an independent contractor or an employee, which of the following can be used to make this determination?

i. If the individual is compensated for services provided then they are an employee

ii. If the individual is compensated for services provided then they are an independent contractor

iii. If the individual withholds taxes on a payment for services then the individual is an independent contractor

iv. If an employer withholds income taxes, withholds and pays Social Security and Medicare taxes, and pays unemployment tax on wages paid, then the individual is an employee

c. Generally, if the taxpayer is an independent contractor he or she is considered self-employed, and should report income (nonemployee compensation) on which form?

i. Schedule A (Form 1040)

ii. Schedule B (Form 1040)

iii. Schedule C (Form 1040)

iv. Schedule D (Form 1040)

d. When considering whether an activity is a hobby or a business, which of the following is correct?

i. A hobby is defined as an activity done regularly in one's leisure time for pleasure and does not result in a profit

ii. Schedule C can be used to report income derived from a hobby

iii. An activity is a business if it makes a profit during at least three of the last five tax years, including the current year

iv. All of the above

e. Dustin is a sole-proprietor who owns a small business that makes business cards for other companies. He started the company in 2015 and had $4,800 in total business expenses for the year. Which of the following applies to Dustins small business?

i. Dustin must use Schedule C when filing the business return

ii. Dustin can use Schedule C-EZ because he had less than $5,000 of expenses

iii. Dustin can use Schedule A because he had less than $5,000 of expenses

iv. Dustin does not have to file a Schedule C or C-EZ because his business had less than $5,000 in expenses

f. Which of the following statements is correct regarding Schedule C and C-EZ?

i. Small businesses with business expenses of $7,000 or less may be able to file Schedule C-EZ instead of Schedule C

ii. Schedule C is used only to report profit from a business

iii. Schedule C is used to report profit or loss from a business

iv. Small businesses with less than 10 employees should use Schedule C-EZ

g. Kirk decides to use the simplified option for his home office deduction on his 2015 tax return. He figures he uses 200 square feet of his home for business. What is his allowable home office deduction?

i. $0

ii. $600

iii. $1,000

iv. $2,000