Question

Robert Lento, the sole proprietor of a consulting business, has gross receipts of $600,000 in 2019. Expenses paid by his business are Advertising $ 2,500 Employee salaries 150,000 Office rent 24,000 Supplies 18,000 Taxes and licenses 17,000 Travel (other than meals) 3,800 Business Meals 2,400 Utilities 3,800 Employee health insurance premiums 6,600 Health insurance premiums for Robert 2,200 Robert purchased a new car for his business on May 15 for $50,000. He also purchased $50,000 of new 5-year equipment and $238,000 of 7-year fixtures on August 1. Robert drove the car 10,000 miles (8,000 for business and 2,000 personal miles). He paid $200 for business-related parking and tolls. He also paid $1,000 for insurance and $1,200 for gasoline and oil for the new car. He would like to maximize his deductions. What is Robert's net income (loss) from his business? How much self-employment tax must Robert pay? If this is Robert's only source of income, what is his adjusted gross income?

Answer 1

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