Net earnings from self-employment

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

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

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

3 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

4 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

5 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 275-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

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