Question

George, a sole proprietor, may deduct various taxes imposed by federal, state, local, and foreign governments, if he incurs them in the ordinary course of his business. A of the following are deductible on Schedule C, Form 1040, except

A. Real estate taxes on real property used in his business.
B. State and local income taxes on net income.
C. Personal property taxes on personal property used in his business.
D. Gasoline taxes included in the cost of fuel used in his business.

Answer 1

Option B, state and local income taxes on net income, are not deductible on Schedule C, Form 1040 but rather on the individual's personal return. Real estate taxes, personal property taxes, and gasoline taxes related to business use are deductible on Schedule C.

Step-by-step explanation:

George, a sole proprietor, can deduct various taxes incurred in the ordinary course of his business when filing Schedule C on Form 1040. However, state and local income taxes on net income (Option B) can be deducted on the individual's personal income tax return and are not deductible on Schedule C. Taxes that are deductible on Schedule C include real estate taxes on property used in the business (Option A), personal property taxes on personal property used in the business (Option C), and gasoline taxes as part of the cost of fuel used in the business (Option D).

On the other hand, state and local income taxes on net income, personal property taxes on personal property used in his business, and gasoline taxes included in the cost of fuel used in his business are all deductible on Schedule C, Form 1040.