Taxation question: Business-Related Expenses. Mike, a self-employed consultant, incurs the following business-related expenses in 2019: Actual automobile expenses $2,500 Moving expenses 4,000 Entertainment expenses 1,500 Travel expenses (including $500 of business meals) 2,500 Professional dues and subscriptions 500 Total $11,000 Mike earned $130,000 of gross income from his consulting business and had $12,000 of interest and dividend income in 2019 before any of the above expenses are deducted. He has $20,000 of itemized deductions. Mike is married and files a joint return with his wife, Ann, who has no income. a. What is the amount of Mike’s deduction for business-related expenses for 2019? b. What is Mike and Ann’s AGI and taxable income in 2019, assuming he is married and files a joint return, and ignoring the self-employment tax?
Business-Related Expenses. Mike, a self-employed consultant, incurs the following business-related expenses in 2019:
Actual automobile expenses $2,500
Moving expenses 4,000
Entertainment expenses 1,500
Travel expenses (including $500 of business meals) 2,500
Professional dues and subscriptions 500
Total $11,000
Mike earned $130,000 of gross income from his consulting business and had $12,000 of interest and dividend income in 2019 before any of the above expenses are deducted. He has $20,000 of itemized deductions. Mike is married and files a joint return with his wife, Ann, who has no income.
a. What is the amount of Mike’s deduction for business-related expenses for 2019?
b. What is Mike and Ann’s AGI and taxable income in 2019, assuming he is married and files a joint return, and ignoring the self-employment tax?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
