Question Asked by vlorenzo9952 2. Answer the following question based on the return you prepared... 2. Answer the following question based on the return you prepared for William Winston. What is the net profit or loss shown on Schedule C? A) $20,295 B) $22,030 C) $54,587 D) $23,987 Chapter 4: Learning Activity Scenario - William Winston prepare a tax return for William Winston (age 56, DOB: 7/1/1963, SSN: 226-00-4265). Mr. Winston is single and lives at 53 Mantis Road, Your City, Your State - Your Zip. He operates Lovely Lady Beauty Salon at 1096 Lovely Lady Lane, Your City, Your State - Your Zip. His EIN is 34-1345709. He is a calendar year taxpayer and operates a cash basis business.

He opened his business on January 15, 2019. He materially participates in his business and did not make any payments that required him to file Form 1099. His gross sales for the year were $69,327. He paid $5,520 for health insurance through a third-party provider.

He had the following business expenses:

Advertising $ 375 Phone $ 894

Commissions 401 Business insurance

596 Supplies 685 License 350

Business personal property tax 245 Travel 800

Wages 14,530 Bank charges 789

Rentals of business property 7,100 FUTA/FICA taxes 2,100

He maintains a logbook for the business use of his car. Mr. Winston placed his vehicle into service on January 15, 2019. He had business mileage of 6,365, 1,946 commuting miles, and 2,110 personal miles. He prefers to use the standard mileage rate. His travel expenses included no meals. They were provided by vendors. His beginning inventory was $0. He had purchases of $16,740, none of which was for personal use. He had no other costs as part of his costs of goods sold. His ending inventory was $2,000.

Mr. Winston's prior year tax liability was $0. He paid timely federal estimated tax payments of $750 per quarter. He did not itemize expenses on his return for tax year 2018.

He made the following purchases, all of which were used 100% for business.

Item Purchase Date Cost Recovery Period Convention Method Office furniture 1/15/19 $1,032 7-year Half-Year 200DB Fixtures 1/15/19 $ 167 7-year Half-Year 200DB Store sign 1/15/19 $ 250 7-year Half-Year 200DB Card reader 1/15/19 $ 458 5-year Half-Year 200DB Display case 1/15/19 $ 225 7-year Half-Year 200DB Telephone/Answering machine 1/15/19 $ 218 7-year Half-Year 200DB Mirrors * 1/15/19 $ 85 Manicure table * 1/15/19 $ 817 Computer 1/15/19 $ 503 5-year Half-Year 200DB Facial chair 1/15/19 $ 487 7-year Half-Year 200DB Adding machine/Calculator * 1/15/19 $ 80 Manicure chair * 1/15/19 $ 163 Printer 1/15/19 $ 285 5-year Half-Year 200DB

* Mr. Winston wishes to expense these items under Section 179. Note: Do not use special depreciation for any of these assets.

Qs 1. What are the gross receipts shown on Schedule C?

Qs 2. What is the net profit or loss shown on Schedule C?

Qs 3. What is the deductible part of self-employment tax shown on Form 1040?

Qs 4. What is the refund or balance due?