US TAX Return (FORMS 1040, 1040SE and 1040C): Julie is a freelance writer and sh
ID: 2484841 • Letter: U
Question
US TAX Return (FORMS 1040, 1040SE and 1040C):
Julie is a freelance writer and she calls her business Writing on the Side. Julie is a cash basis taxpayer. Her business office is located at 120 N. Main St., Wheaton, IL 60187. She uses the cash method of accounting.
• Julie had the following income and expense items associated with her business:
o Income from sale of articles: $143,000 o Rent on her office space: $20,500
o Office utilities: $8,400 o Office supplies: $5,450 o Liability insurance for her business: $9,880
o Business meals while travelling on company business: $5,000
o Other business travel expenses: $7,000 o 2015 depreciation on assets acquired prior to 2015 is $5,000.
o None of these expenses require the filing of a form 1099.
o Julie purchased and placed in service the following new fixed assets for her business:
• Office Furniture and fixtures costing $30,000 on January 10, 2015 • Computer equipment costing $20,000 on March 28, 2015
• Automobile (2014 BMW) costing $39,000 on January 5, 2015. Total business mileage for the year was 8,400 (70% for business use). Total mileage for the year was 12,000. Julie will use the actual cost method for the auto.
She will not elect Section 179 for the auto. Additional expenses of operating the car for the entire year are as follows:
• Gasoline: $3,650
• Repairs and Maintenance: $570
• Comprehensive insurance coverage premiums: $1,160
Explanation / Answer
Profit and Loss account
Gross receipts or sales (income on sale of articles) = $143,000
total costs that are to be included
Office utilities - $8400
Office supplies - $5450
depreciation on assets acquired before 2015 - 5000
office funiture & fixtures - $30000
Computer equipment - $20000
Total costs $68850
Balance after deducting expences $74150
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