Bob operates his own business called Incredible Investigation , as a calendar year, cash basis, crime fighting
Question:
Bob operates his own business called Incredible Investigation , as a calendar year, cash basis, crime fighting consultant. This year’s bob’s business gross receipts were $140,000 and had the following expenses:
Advertising | 25,000 |
Liability insurance | 10,000 |
Business license Fees | 2,000 |
Business Travel Expenses | 8,000 |
Bribes to Police department | 7,500 |
Meal with clients | 10,000 |
Office rental | 15,000 |
Professional Crime investigation Association annual membership Fees: | 3,000 |
Independent Contractor payments | 15,000 |
Political contributions to Federal Senate election | 10,000 |
Investigation expenses for purchase of the crime investigation firm | 5,000 |
Investigation expenses for purchase of the elastics company | 8,000 |
- Bob uses his car, the Incredible business only.
- He only has receipts for his gas for 10,000, but not any of the actual expenses.
- He has also kept a contemporaneous record of his 12,500 business miles.
- He investigated 2 business this year, but he didn’t end up purchasing either one.
- 1 business was a competitor crime investigator firm
- 2nd business was an elastics company
- Incredible investigation is a CASH basis taxpayer and rents office space at 195 syndrome Lane, Santa Clara CA,
- But Bob mainly works in a business use only room as his home office in his home in Sunnyvale
- The square footage of the room is 400
- The total square footage of their home is 4,000 sf
What is Incredible Investigation’s net taxable income BEFORE the Qualified Business Income Deduction?
- What method did you select to compute Bob’s deductible car expenses and why?
- Which of the listed expenses is NOT deductible by Incredible Investigation as a business expense?
- What is the deductible from the expenses of investigation of the crime investigation firm and the elastics company?
- What is the amount of his deductible meal expenses?
- What is his home office deduction?
Principles of Taxation for Business and Investment Planning 2016 Edition
ISBN: 9781259549250
19th edition
Authors: Sally Jones, Shelley Rhoades Catanach