Mike Is a Self-Employed TV Technician

question 5

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 2009 for $8,200.Mike is single, has no dependents, and claims the standard deduction.What is his 2012 taxable income? (Ignore the self-employment tax deduction.)

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Definitions:

Legislator

An elected official who is involved in the process of making or enacting laws.

Persuade

The action of convincing someone to do or believe something through reasoning or the use of temptation.

Facts

Information that is verifiable, objectively true, and supported by solid evidence.

Johnson Amendment

A provision in U.S. tax code prohibiting 501(c)(3) nonprofit organizations from endorsing or opposing political candidates.