Mike Is a Self-Employed TV Technician

question 18

Essay

Mike is a self-employed TV technician. He is usually paid as soon as he completes repairs, but occasionally bills a customer with payment expected within 30 days. At the end of the year he has $2,500 of receivables outstanding. He expects to collect $1,200 of this and write off the remainder. Mike is a cash basis taxpayer and had net earnings from his business (not including the effect of the items above) of $55,000. He also had $3,500 interest income, $200 gambling winnings, and sold corporate stock for $7,000. The stock had been purchased in 2013 for $8,200. Mike is single, has no dependents, and claims the standard deduction. What is his 2017 taxable income? (Ignore the self-employment tax deduction.)

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Definitions:

Downsizing

The process of reducing the size of a company's workforce to improve its efficiency and reduce costs, often leading to layoffs.