Dilly’s dream was to open a cookie shop, so she did her homework carefully be-fore finally opening “Dilly’s Delights” on July 1, 2019. Before that date she had incurred the following “soft costs” – $12,000 realtor’s fee for finding a storefront to rent,$16,000 attorneys’ fees for negotiating a lease and trademark services,$8,000 wage expense for employees during the pre-opening period, and$18,000 for pre-opening TV and other advertising. Calculate and state the exact amount that you, in preparing Dilly’s 2019 return, will enter as her 2019 start-up costs deduction.

Answered: Calculate and state the exact amount…

Calculate and state the exact amount that you, in preparing Dilly’s 2019 return, will enter as her 2019 start-up costs deduction.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter11: Individuals As Employees And Proprietors

Section: Chapter Questions

Problem 26P

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Dilly’s dream was to open a cookie shop, so she did her homework carefully be-fore finally opening “Dilly’s Delights” on July 1, 2019. Before that date she had incurred the following “soft costs” – $12,000 realtor’s fee for finding a storefront to rent, $16,000 attorneys’ fees for negotiating a lease and trademark services, $8,000 wage expense for employees during the pre-opening period, and $18,000 for pre-opening TV and other advertising. Calculate and state the exact amount that you, in preparing Dilly’s 2019 return, will enter as her 2019 start-up costs deduction. Note: There’s no useful reason to show your work here because there’s only one correct dollar-amount answer; no explanation of an incorrect answer will help.
In May 2019, Regina graduated from the Naval Academy with a degree in engineering and was assigned to San Diego as a permanent duty station. In her move to San Diego, Regina incurred the following costs:$450 in gasoline.$250 for renting a truck from UPAYME rentals.$100 for a tow trailer for her car.$85 in food.$25 in double espressos from Starbucks.$300 for motel lodging on the way to San Diego.$405 for a previous plane trip to San Diego to look for an apartment.$175 in temporary storage costs for her collection of crystal figurines. Required: If the government reimburses her $900, how much, if any, may Regina take as a moving expense deduction on her 2019 tax return?
In May 2020, Regina graduated from the Air force Academy with a degree in aeronautical engineering and was assigned to Homestead, Florida. as a permanent duty station. In her move to Homestead, Regina incurred the following costs: $525 in gasoline. $295 for renting a truck from UPAYME rentals. $130 for a tow trailer for her car. $115 in food. $40 in double espressos from Starbucks. $390 for motel lodging on the way to Homestead. $510 for a previous plane trip to Homestead to look for an apartment $235 in temporary storage costs for her collection of crystal figurines Required: If the government reimburses her $900, how much, if any, may Regina take as a moving expense deduction on her 2020 tax return? Moving expense doduction
Your business operates on January 1 to December 31 calendar year basis. On April 1, 2020, you purchased a new delivery truck for your business. The truck was imported from India. The price of the truck is $50,000. Other costs related to the truck are as follows: insurance during transportation $2,000, painting and lettering your company logo $500, one-year road insurance $1,000, sales taxes and fees $2,500, oil and lubricants for the truck $500, import taxes $5,000. The truck's estimated useful life is 7 years and you expect that the salvage value of the truck will be $1,000. It will be depreciated using the double-declining method. Your task: Assume that on August 1, 2024, you decide to change your depreciation estimates. The new depreciation will be using the straight-line method, the total useful life of the truck is estimated to be 9 years and the new salvage value is estimated to be $500. Prepare a depreciation schedule for the truck using straight-line depreciation.
Craig has decided to start snow plowing during the winter months. He purchased a heavy-duty dump truck with plow and salter from Power Equipment for $40,000 on October 1st, 2026. He paid $1,000 as a down payment and the remaining balance on a 5% -7 year note to Power Equipment. You will be completing several accounting activities in regards to this purchase. What would the journal entry be for the check 1. Use the write check function in QB Online to record the entire purchase (down payment and capitalization of the truck and related liability). Use check number 171. Create accounts as needed in QB Online. You may find it helpful to write out the journal entry first before completing it in QB Online.
Your business operates on January 1 to December 31 calendar year basis. On April 1, 2020, you purchased a new delivery truck for your business. The truck was imported from India. The price of the truck is $50,000. Other costs related to the truck are as follows: insurance during transportation $2,000, painting and lettering your company logo $500, one-year road insurance $1,000, sales taxes and fees $2,500, oil and lubricants for the truck $500, import taxes $5,000. The truck's estimated useful life is 7 years and you expect that the salvage value of the truck will be $1,000. It will be depreciated using the double-declining method. Your task: Assume that on December 31, 2024, you sell this truck for $12,000. Prepare a journal entry for this sale. Assume on December 31, 2025, the truck is destroyed in an accident and has to be disposed of with no salvage. Prepare a journal entry for disposal.
Jessica Grewal decided to open a food truck business, the Samosa Shack. She encountered the following transactions in managing her equipment over the first 2 years of her business. April 1, 2021 October 1, 2021 December 31, 2021 April 1, 2022 December 31, 2022 March 31, 2023 Purchased food truck for $84,000 and paid $8,400 to have a commercial oven installed. Other costs that she incurred are $8,400 for insurance on the truck for the first year, and $3,000 to have the truck painted with her Samosa Shack logo. Jessica estimates that the truck would last 5 years and have a $12,000 residual value. The oven is also expected to last 5 years and have a $600 residual value. The oven broke down and cost $1,800 to repair. Recorded the adjusting entry for depreciation and insurance. Replaced all of the tires with all-season tires for $1,800 and paid another year of insurance for $8,400. Recorded the adjusting entry for depreciation and insurance. Jessica was exhausted from the food truck…
You have decided to start a landscaping business in Rogers Arkansas (you reside in this city). You purchased a used truck for $9,000-and the necessary landscaping tools. During the month of May you charged and collected $6,000 for services rendered (all landscaping jobs were within the city limits of Rogers). Answer the following questions: 1. What amount of sales tax are you required to pay for the used truck you purchased? 2. How much sales tax should you have collected for services rendered?
Rita is keen to grow her business and provided some information on two transactlons that she undertook during the year. The first was the purchase of an individual asset for the business called a Techpager. wwym ww The initial cost of the machine itself was $32,000 with several extra required fees and charges. Rita also decided to include a number of optional extras in the purchase. Installation of Techpager $1500 Transportation and Shipping Costs $600 Extended Warranty/Service Program $300 per year. This is an optional service offered by the company that covers all maintenance and repairs costs and is paid annually in advance Sorting and Stapling Unit $1200 (required to allow Rita to produce the booklets for her business) Custom Painting $400 (Rita does not need to have this done but has decided she wants the machine to match her office décor) Insurance $500 per year payable in advance Prepare a general Journal entry to record the individual of the purchase business called Techpager.
While she was a college student, Angel lived by a bookstore located near campus. She thinks a bookstore located on the other side of campus would be successful. She incurs expenses of $42,800 (legal fees, accounting fees, marketing survey, etc.) in exploring its business potential. Her parents have agreed to lend her the money required to start the business. What amount of these investigation costs can Angel deduct if she opens the bookstore on August 1, 2019.
Myrta entered into a contract with "Big Builder on December 1, 2018 to remodel the interior of her Coffee Shop. The Contract required Big Builder to complete the project ata cost of $10,000 on or before January 1, 2019 (so she could open herCoffee Shop that day). Big Builder barely got started on the project by January 1, so Myrta terminated the Contract without paying Big Builder anything. Myrta then found a new Contractor, named "Better Builder who agreed to complete the same project by March 1, 2019 but at a cost of $11,500. Better Builder completed the project on March 1, 2019 and Myrta paid them $11,500. Happy the project is finally complete, Myrta still feels "ripped off by Big Builder and wants to sue them to recover her damages for breach of contract. Not only did Myrta have to pay $11,500 to Better Builder, but (i) she also had to pay a cleaning service $200 to clean up the construction mess Big Builder had left behind and (ii) she also lost an estimated $500 in profits she…
In early December Alice and Bob decided to open Sample Cafe with $14,000 of their own money and $19,000 borrowed from a friend. They have spent $11,000 on equipment and furniture, and they have purchased $2,800 worth of cups for cash which they expect will be used over the next three months. Having put down a $2,400 deposit for a location on Main St., they will pay the first month’s rent when they open their doors on January 1. In the balance sheet template below, fill in the appropriate values as of December 31.