80.2K

Verified Solution

Link Copied!

Comprehensive Problem 1 - Part 2: Schedule C, Schedule SE, Schedule D, and Qualified Dividends and Capital Gains Tax Worksheet

Note: This problem is divided into three parts. You will need to complete some of the forms in the other parts in order to determine the amounts to be used on Form 1040. Some of the data information will be reproduced in the other parts for convenience.

Enter all amounts as positive numbers, except for a "loss". If required, enter a "loss" as a negative number on the tax form. If an amount box does not require an entry or the answer is zero, enter "0". On Schedule SE, when required, round amounts to the nearest dollar. Use the rounded amounts in subsequent computations.

Information regarding Noah's pet store business is reproduced here. Noah's pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is "The Arc," and its taxpayer identification number is 95-9876556. Since you handle Noah's bookkeeping, you have printed the income statement from your Quickbooks software, shown in the table below. The Arc did not claim the COVID-related provisions for the employee retention credit or sick and family leave credits but Noah did defer his self-employment taxes related to The Arc. He estimates 77.5 percent of the profits can be allocated to the period March 27, 2021 through December 31, 2021.

The Arc 95-9876556 Income Statement For the Year Ended December 31, 2021
Revenue:
	Gross Sales			$144,000.00
	Less: Sales Returns and Allowances			-
	Net Sales			$144,000.00
Cost of Goods Sold:
	Beginning Inventory	$10,500.00
	Add: Purchases	62,200.00
		$72,700.00
	Less: Ending Inventory	10,100.00
	Cost of Goods Sold			62,600.00
	Gross Profit (Loss)			$81,400.00
Expenses:
	Dues and Subscriptions	-
	Estimated Federal Tax Payments	4,000.00
	Estimated State Tax Payments	3,900.00
	Insurance	3,950.00
	Meals and Entertainment	1,500.00
	Miscellaneous	-
	Payroll Taxes	3,800.00
	Professional Fees	1,700.00
	Rent	8,400.00
	Travel	1,250.00
	Utilities	1,300.00
	Vehicle Expenses	-
	Wages	25,000.00
	Total Expenses			54,800.00
	Net Operating Income			$26,600.00

Details of The Arc's meals and entertainment:

$400 Restaurant meals associated with business travel 300 Arc employee holiday party 200 Restaurant overtime meals for employees 600 Sports tickets for entertaining large customers $1,500

Answer & Explanation Solved by verified expert

See Answer