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Use IRS Publication 334, Schedule F instructions and California 540A / 540 Booklet to complete this topic.
Please complete a return for Olive Brown.
Prepare Form 1040, Schedule C , Schedule SE, Form 4562, California Form 540, and California Schedule CA.
Olive is a 27 year old unmarried taxpayer.
She owns and manages Fashions At Discount (Activity codes). A Clothing store that she started in 2007.
Address for business is 4858 Ocean Ave, Lompoc, CA 93457.
She had the following for her store:
Income Statement
Year Ended December 31, 2007
 | Gross receipts............................................$400,000 |
|
| Minus: Returns and allowances...........................14,940 |
|
| Net receipts...............................................$385,060 |
|
| Minus: Cost of goods sold................................288,140 |
|
| Gross profit................................................$96,920 |
|
| ======== |
Cost of Goods Sold
|
| Inventory at beginning of year.........................$37,845 |
|
| Plus: Purchases...........................$285,900 |
|
| Minus: Items withdrawn personal ........2,650......283,250 |
|
| Goods available for sale...............................$321,095 |
|
| Minus: Inventory at end of year........................32,955 |
|
| Cost of goods sold......................................$288,140 |
|
| ======== |
Expenses:
| Bank service charges........................................150.00 |
| Insurance.....................................................270.00 |
| Interest paid for business loan..........................2,500.00 |
| Professional services.......................................400.00 |
| Rent........................................................12,000.00 |
| Repairs and Maintenance...................................860.00 |
| Supplies......................................................1,200.00 |
| Advertising................................................4,000.00 |
| Taxes and licenses.........................................5,000.00 |
| Utilities (including telephone)...........................3,500.00 |
| Wages......................................................59,050.00 |
| Chamber of Commerce......................................120.00 |
| Window washing..............................................190.00 |
| Depreciation for Store equipment (cash register, etc)..$834.00 (enter on line 17 of Form 4562) |
Inventory is valued at cost and there was no change in determining inventory at any time during the year.
In addition, Olive had the following:
|
| Interest income from First Bank..............$490.00 |
|
| Health insurance paid for herself............$2,400.00 (Plan established under the business and she does not have any insurance at her work). |
Olive paid rent all year in 2007. Use W2 for basic information. Address and other information on W2 is current.
Have your return prepared and ready to answer the questions.
Option 1: Complete Quiz online.
Instructions to submit quiz successfully: Step-by-Step check list
When prompted for your name, please enter your CTEC or Preparer Number (if you have a number) with your name as follows: First, last name, Number (e.g. John Smith A012345 / John Smith P012345)
Option 2: Complete and mail answer sheet.
If you choose not to complete the quiz by pressing "Start quiz" above, you can print questions and answer-sheet to mail to us. If you complete the online quiz, the advantage is that you get an automatic score as apposed to waiting for a response on a manually graded quiz. You can also print the questions and answer sheet and after you answered the questions on paper submit it online by choosing "Start Quiz" above. Please don't sent answer sheet by certified mail.
Print questions Print Answer sheet
Please Note: You must also complete the tax return for this assignment. If you turn in incomplete work, such as purposely not answering the questions regarding the return you prepared, you will not be given credit for the topic.
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