Judy Is a Self-Employed Musician Who Performs for a Variety

question 55

Essay

Judy is a self-employed musician who performs for a variety of events. This year, Judy was fined $250 by the city for violating the city's noise ordinance with a relatively loud performance. As a consequence, Judy contributed $1,000 to a campaign committee formed to recall the city's mayor. Judy normally hires three part-time employees to help her schedule events and transport equipment. Judy paid a total of $33,000 to her employees through June of this year. In June, Judy fired her part-time employees and hired her husband to replace them. However, Judy paid him $55,000 rather than $33,000. Judy is on the cash method and calendar year, and she wants to know what amount of these expenditures is deductible as business expenses.

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Definitions:

Insurance in Transit

Insurance in transit covers risk to goods and materials while they are being transported from one location to another.

Inventory Costs

Expenses associated with storing and managing goods that a company holds for sale.

Service Charge

A fee collected by a financial institution, or any other service provider, for the services they provide.

Bank Credit Cards

Bank credit cards are financial tools issued by banks that allow cardholders to borrow funds within a pre-approved credit limit for purchases or cash advances.