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:

Incremental

Relating to or denoting an increase or addition, especially one of a series on a fixed scale or in discrete units.

Pushbutton

A simple switch mechanism for controlling some aspect of a machine or a process, often used to start or stop functions.

Counter

In digital logic and computing, a counter is a device that stores and displays the number of times a particular event or process has occurred, often used for tracking repetitions in a circuit or program.

Accumulated Count

A value that represents the total number of events or quantities that have been counted over a period of time.