Directions This scenario does not require you to prepare a tax return. Refer to the interview notes and accompanying Forms 1099-NEC and 1099-K for the information needed to answer the questions that follow. Interview Notes Keisha and Jay are married and file a joint return. Jay is an employee and received a Form W-2 showing $30,000 in wages for the year. Keisha is a self-employed driver for Delicious Deliveries. Keisha and Jay had health insurance subsidized by Jays employer. They paid $3,600 pre-tax in premiums for the year. Keisha provided a statement from the food delivery service that indicated the amount of mileage driven and fees paid for the year. These fees are considered ordinary and necessary for the food delivery business: 7,200 miles driven while delivering food Insulated box rental: $300 Vehicle safety inspection (required by Delicious Deliveries): $50 GPS device fee: $120 Keisha also kept receipts for the following out-of-pocket expenses: $100 for tolls $120 for car washes $48 for parking tickets $75 for Personal Protective Equipment (PPE) used during deliveries $150 for snacks and lunches Keisha consumed while working Keishas record keeping application shows she also drove 4,125 miles between deliveries and 4,200 miles driven between her home and her first and last delivery point of the day. Keisha has a separate car for personal use. She bought and started using her second car for business on September 1, 2020. Keisha provided the Form 1099-NEC and Form 1099-K that she received from Delicious Deliveries. See the next page. Keisha also received $300 in cash tips that were not reported elsewhere. Keisha and Jay also paid the following this year: Mortgage interest = $5,000 Property tax = $3,000 Donations of clothing in good used condition = $350 (fair market value) Cash donations to qualified charities = $550 Tools for Jays job = $300 State income taxes withheld = $4,000 Keisha won $10,000 on a scratch off lottery ticket. She has $3,000 of losing tickets.11. What is Keishas Schedule C net profit? a. $8,006 b. $10,040 c. $10,358 d. $17,345 12. How much of Keishas gambling winnings must be included in adjusted gross income (AGI)? $____________ 13. How much can Keisha and Jay claim as charitable contributions if they take the standard deduction? a. $300 b. $550 c. $600 d. $900 14. Which of the following statements is true: a. Keisha can add the $3,600 they paid for health insurance premiums to her selfemployment expenses on Schedule C. b. Keisha can claim the $3,600 they paid for health insurance premiums as a selfemployed health insurance deduction on Schedule 1. c. Keisha can claim her portion of the health insurance premiums, $1,800, as a self-employed health insurance deduction on Schedule 1. d. Keisha can add her portion of the health insurance premiums, $1,800, to her self-employment expenses on Schedule C. e. Keisha is not eligible for a self-employed health insurance deduction.

11. What is Keishas Schedule C net profit? a. $8,006 b. $10,040 c. $10,358 d. $17,345

12. How much of Keishas gambling winnings must be included in adjusted gross income (AGI)? $____________

13. How much can Keisha and Jay claim as charitable contributions if they take the standard deduction? a. $300 b. $550 c. $600 d. $900

14. Which of the following statements is true:

a. Keisha can add the $3,600 they paid for health insurance premiums to her selfemployment expenses on Schedule C.

b. Keisha can claim the $3,600 they paid for health insurance premiums as a selfemployed health insurance deduction on Schedule 1.

c. Keisha can claim her portion of the health insurance premiums, $1,800, as a self-employed health insurance deduction on Schedule 1.

d. Keisha can add her portion of the health insurance premiums, $1,800, to her self-employment expenses on Schedule C.

e. Keisha is not eligible for a self-employed health insurance deduction.