From the records of Tom, a cash basis sole proprietor, the following information was available: Gross receipts $30,000 Dividend income (on personal investments) $     200 Cost of sales $15,000 Other operating expenses $  3,000 State business taxes paid $     300   1)What amount should Tom report as net earnings from self-employment? a

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From the records of Tom, a cash basis sole proprietor, the following information was available:

Gross receipts	$30,000
Dividend income (on personal investments)	$     200
Cost of sales	$15,000
Other operating expenses	$  3,000
State business taxes paid	$     300

 

1)What amount should Tom report as net earnings from self-employment?

a.	$10,900
b.	$11,700
c.	$12,000
d.	$15,000
e.	None of the above

 

2.  Which of the following is not an acceptable method of accounting under the tax law?

a.	The accrual method
b.	The cash method
c.	The hybrid method
d.	All of the above are acceptable
e.	None of the above

 

3.  Becky is a cash basis taxpayer with the following transactions during her calendar tax year:

 

Cash basis revenue	$54,000
Cash basis expenses, except rent	$25,000
Rent expense (paid on December 1) for use of a building for 18 months	$36,000

 What is the amount of Becky's taxable income from her business for this tax year?

a.	$17,000
b.	$23,000
c.	$25,000
d.	$27,000
e.	None of the above

 

4.  Jenny constructed a building for use as a residential rental property. The cost of the building was $180,000, and it was placed in service on August 1, 1990. The building has a 27.5-year MACRS life.  What is the amount of depreciation on the building for 2015 for tax purposes?

a.	$2,000
b.	$6,000
c.	$3,000
d.	$6,547
e.	None of the above