T2125 - Tax Form Practice Problem Danielle "Danny" Thomas runs a home-based business that she purchased from a family friend on December 31 st of last year. The purchase included all the inventory of the existing business at a cost of $9,000 and the business name and web domain for an additional $5,000. In her business Danny purchases all-natural hair care products from various local suppliers and sells them online via her website Dragonesshair.com. Her business is an unincorporated sole proprietorship (she has no partners). Danny has a workspace in her home which is 150 sq ft and her total home is 1,000 sq ft. She operates the business fully out of her home. All inventory is stored in her home and all shipping is prepared there as well. Danny has no tax or accounting background and has asked you to help her prepare her tax return. She has provided you with the following financial information: REVENUES Sales of product $100,000 Shipping charges $12,000 EXPENDITURES: Hair care products (for resale) $53,000 Advertising $4,700 Accounting software $500 Small tools (each under $500) $750 Competitor's customer list (See Note 1) $2,500 Delivery truck (See Note 2) $6,000 Legal and accounting fees $3,600