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:

Infundibulum

A funnel-shaped structure, often used to describe parts of the anatomy such as the connection between the ovaries and fallopian tubes or parts of the brain.

Ovum

The female reproductive cell or egg, which, when fertilized by a sperm, can develop into an embryo.

Blastocyst

A stage of early development in mammals that consists of a spherical outer layer of cells, enclosing a fluid-filled cavity and a cluster of cells.

Embryo

An early stage of development for multicellular organisms, in humans it refers to the period from fertilization until the eighth week.