Tax Return Problem 1

Cassi (SSN 412-34-5670) has a home cleaning business she runs as a sole proprietorship. The following are the results from business operations for the tax year 2020:

Gross receipts

$203,000

Business mileage: 27,000 (miles incurred ratably throughout the year) 35,000 miles total during the year 2020 Van (over 6,000 lb) placed in service 1/01/2020, cost 27,000

Postage

(500)

Wages

(26,000)

Payroll taxes

(1,950)

Supplies

(12,500)

Phone

(1,250)

Internet service

(600)

Rent

(2,400)

Insurance

(2,800)

Van expenses

(4,500)

Business assets

Date Purchased

Cost

Computer 1

5/18/20

$2,200

Computer 2

6/01/20

2,700

Printer

3/01/19

900

Copier

3/02/19

2,100

Furniture

3/01/19

6,000

page 6-60

Determine Cassi's self-employment income and QBI deduction. Cassi does not elect to defer her self-employment tax under the Cares Act. Prepare Schedule C and Schedule SE. Section 179 expense is elected on all eligible assets ( 179 was not taken on assets purchased last year). Cassi had qualifying health care coverage at all times during the tax year.