William, a cash-basis sole proprietor, had the following receipts and disburseme

Question

William, a cash-basis sole proprietor, had the following receipts and disbursements for 2014: (i) Gross receipts $50,000, (ii) Cost of sales $30,000, (iii) Other operating expenses$6,000, (iv) Medical expenses $600. For 2014, what amount should he report as net earnings from self-employment? (Points : 1)

$13,400

$14,000

$19,400

$20,000

None of the other choices

       $4,500
       $9,000
       $31,500
       $54,000
       None of the other choices provided

Kate is an accrual basis, calendar-year taxpayer. On November 1, 2014, she leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 × 7 months). How much income must Kate include on her 2014 tax return as a result of this transaction? (Points : 1)

Explanation / Answer

1)

Net earnings from self-employment = Gross receipts - Cost of sales -  Other operating expenses

Net earnings from self-employment = 50000-30000-6000

Net earnings from self-employment = $ 14000

2) Kate include on her 2014 tax return as a result of this transaction = 4500*2

Kate include on her 2014 tax return as a result of this transaction = $ 9000

Answer

$9,000

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