Posted: April 10th, 2024

Maria A Solo (SSN 318-01-6921) lives at 190 Glenn drive, grand rapids, Michigan

Maria A Solo (SSN 318-01-6921) lives at 190 Glenn drive, grand rapids, Michigan49527-2005. Maria (age 45 and single) claims her aunt, Selda Ray (ssn 282-614011), as a dependent. Selda lives with Maria. Maria owns and operates theReliable drug company at 1816 first st in grand rapids, Michigan 49503-1902, inwhich she materially participates the entire year. Her EIN is 38-9654321. Employerquarterly payroll tax returns were filed as required, and Maria values her inventoryat cost. The income statement for 2013 is reproduced on the next page. Mariareports on the accrual method, but uses the “direct write-off” method to computebad debt expense. Her business code is 446110. She does not deduct expenses foran office in her home.An examination of Maria’s business records reveals that the depreciable propertyincludes furniture, a delivery truck, and store equipment. The depreciation expenseshown on the 2015 income statement meets the income tax requirements fordepreciation for using the mentioned assets during 2015. Maria rounds calculationsto the nearest dollar. Miscellaneous expenses include the following:Reimbursement to Maria for actual expense of a business trip($256 for airfare and lodging, $70 for meals)$326Contributions to the Red Cross and United Way350Chamber of Commerce dues125Personal electric bill for August80Total Miscellaneous expenses$881Other income for Maria includes a salary of $100 each month for her services as amember of working committee of the Drug Association. Her form W-2 from theassociation shows gross wages of $1,200 and federal income tax withheld of $296.Maria also earned $320 in taxable interest. Maria made federal estimated taxpayments totaling $5,000 during 2013. This amount is reported in the Paymentssection on Form 1040, page 2.Prepare Form 1040, and Schedules C, and SE for Maria Solo using the formsprovided on the pages that follow. Maria does not want $3 to go to the Presidentialelection campaign fund. She signs her return on April 15, 2016.RELIABLE DRUG COMPANYIncome statementFor the year ended December 31, 2013Operating Revenue:SalesLess sales returns and allowanceNet SalesCost of merchandise sold:Merchande inventory, beginningPurchasesLess purchase returns and allowancesNet purchaseMerchandise available for saleLess merchandise inventory, endingCost of merchandise soldGross profit on salesOperating expenses:Advertising expenseBad debt expense (direct write off method)Car and truck expenseDepreciation expenseInsurance expense (other than health)Miscellaneous expensePayroll taxesRent expense (other than business property)Telephone and utilities expenseWages expenseTotal operating expenseNet income$324,200(3,390)$320,810$68,920$198,240(8,100)$190,140$259,060(69,185)(189,875)$130,935$6,5418507,967*3,3966448813,47112,0002,39562,500(100,645)$30,290*Maria drove her personal automobile for 13,856 business miles during the year.Total miles for the year were 32,815. There were 1,300 commuting miles. This isMaria’s only car. She has kept a written log documenting her business miles. Mariafirst used the car in her business on May 4, 2013. She uses the standard mileagemethod.

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