Reference no: EM132234222
Question - Robert Lento, the sole proprietor of a consulting business, has gross receipts of $600,000 in 2017. 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
Meals and entertainment 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 $28,000. He also purchased $50,000 of new 5-year equipment and $238,000 of used 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.
a. What is Robert's net income (loss) from his business?
b. How much self-employment tax must Robert pay?
c. If this is Robert's only source of income, what is his adjusted gross income?
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