Question

Peter is a self-employed attorney. he gives the following information about his business to his cpa for use in preparing his 2022 tax return:

income
fees from law practice$152,000
expenses
malpractice insurance $8,000
office rent 12,500
office supplies 5,600
travel expense 2,000
restaurant meals 4,000
entertainment 4,000
paralegal wages 25,500
country club dues (peter uses the club for business entertainment) 2,500

peter also drove his car 5,850 miles ratebly for business and used the standard mileage method for computing transportation costs.
how much will peter show on his schedule c for 2022 for:
a. Income ___
b. Tax deductible expenses ____
c. Taxable income ____

Answer 1

Peter will show $152,000 on his Schedule C for 2022 as his income. Peter's tax deductible expenses on his Schedule C for 2022 will be $64,600. Peter's taxable income on his Schedule C for 2022 will be $87,400.

Step-by-step explanation:

To calculate the figures for Peter's Schedule C for 2022, we need to determine his income and tax deductible expenses before calculating his taxable income.

a. Income: Peter's income is the fees he receives from his law practice, which is $152,000.

b. Tax deductible expenses: Peter can deduct certain expenses from his income, including malpractice insurance, office rent, office supplies, travel expenses, restaurant meals, entertainment, paralegal wages, and country club dues. Adding up these expenses, Peter's total tax deductible expenses come to $64,600.

c. Taxable income: To calculate Peter's taxable income, we subtract his tax deductible expenses from his income. Therefore, Peter's taxable income is $152,000 - $64,600 = $87,400.