Peter Is a Self-Employed Attorney

question 21

Essay

Peter is a self-employed attorney. He gives the following information about his business to his CPA for use in preparing his 2014 tax return:
Peter also drove his car 5,191 miles for business and used the standard mileage method for computing transportation costs. How much will Peter show on his Schedule C for 2014 for:

a.Income
b.Tax deductible expenses
c.Taxable income

Identify the indicators of earnings quality through deferred tax assets and liabilities analysis.

Comprehend the principles governing taxable income.

Understand the valuation allowance and its impact on income tax expense.

Understand the rationale and requirements for disclosing details related to deferred tax assets and liabilities.

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Definitions:

Credit Decreases

In accounting, actions that decrease liabilities or increase assets, typically reflected in the credits column of a ledger.

Account

A record that summarizes financial transactions of a specific type, such as revenue, expenses, assets, or liabilities.

Credit

An accounting entry that increases a liability or equity account, or decreases an asset or expense account.

Increased

A term indicating that a numerical value, quantity, or financial metric has gone up from a previous measurement.