Peter Is a Self-Employed Attorney Peter Also Drove His Car 5,580 Miles for Business and His

question 65

Essay

Peter is a self-employed attorney.He gives the following information about his business to his CPA for use in preparing his 2018 tax return: $\begin{array}{c}\begin{array}{lll}\text {Income}\\\text {Fees from law practice}\\\\\underline{\text {Expenses}}\\\text {Malpractice insurance}\\\text {Office rent}\\\text {Office supplies}\\\text {Travel expense}\\\text {Meals}\\\text {Entertainment}\\\text {Paral egal wages}\\\text {Country club dues (Peter uses the club for business entertainment)}\end{array}\begin{array}{lll}\\\$153,000\\\\\\\$8,000\\12,000\\5,600\\2,000\\3,800\\4,000\\25,500\\2,500\end{array}\end{array}$
Peter also drove his car 5,580 miles for business and used the standard mileage method for computing transportation costs.How much will Peter show on his Schedule C for 2018 for:
a.Income
b.Tax deductible expenses
c.Taxable income

---

Definitions:

Allocation of Cost

The process of assigning a cost or group of costs to one or more cost objectives, such as projects, functions, or departments.

Straight-Line Depreciation

An arrangement for apportioning the financial burden of a tangible asset equally over its viable years.

Residual Value

The projected value remaining for an asset at the conclusion of its operational lifespan.

Estimated Life

The projected period over which an asset is expected to be useful in the operations of a business for depreciation purposes.