[answered] Larry is doing Landscape business. We can claim only those

Hi!

For my submittal, I had sent this document (8719915, the attached) to my instructor. However this is what he wrote to me.?

Good Evening,

?This assignment involves using the correct tax forms not making up your own. To give you a start, one form would be a 1040 and another would be a schedule C, which is what sole proprietors use. There are two other forms that you would need for full credit. On the narrative, there are some things you can use in your tax advice but could you put it in a memo format rather than an outline and I will regrade it.

Please help me to understand what needs to be done, please help. What are the other two forms and how should they be filled out? Thank you.

Larry is doing Landscape business. We can claim only those expenses which are related to

 

business. He is using 15% office space for business purpose; therefore we have considered

 

home related and home insurance expense up to 15% as business expenses.

 

Larry

 

Larry's Luxury Landscaping Service

 

13579 Grassy Knoll

 

Description

 

Business Income

 

Deductions:

 

Wages paid to others

 

Employment Taxes

 

Advertising Expenses

 

Repair & Maintenance

 

Fuel Expenses

 

Home office cost (15%)

 

Home Insurance (15%)

 

Health Insurance Premium

 

Taxable Income Amount

 

$3,25,000

 

$48,000

 

$3,200

 

$2,400

 

$12,000

 

$6,500

 

$149

 

$293

 

$15,000

 

$2,37,458 Larry?s lawn equipment is in great working condition and it is fully depreciated. So, he

 

cannot take depreciation as business expenses because it is already recovered their cost

 

but he can use it.

 

Larry?s pay $ 15000 a year in health insurance premiums for full family coverage. He

 

can deduct this expense as business expense as per IRS Publication 974. But you should

 

earn profit in this year.

 

Larry currently has no retirement plan aside from social security plan. In this case, he

 

has to pay more tax because he is not incurring any expense on retirement plan.

 

Larry will be purchasing new office equipment this year. He can take depreciation on

 

these assets because he is using this equipment?s for office use.

 

He can also deduct acquisition cost of computer as per Internal Revenue Code section 179 if

 

qualified, by electing to recover all or part of the cost up to a dollar limit, by deducting the

 

cost in the year the computer in service, and if there is any remaining cost, by depreciating it

 

over a 5-year recovery period. If there is any remaining cost and if the computer is eligible

 

for the 50% special depreciation allowance in the year the computer in service, he can

 

depreciate 50% of the remaining cost in the year the computer in service and depreciate the

 

other 50% of the remaining cost over a 5-year recovery period. Larry?s wife and oldest son are helping him without taking wages. He can fixed their

 

wages and reduce his taxable income from that amount.

 

Larry wants to upgrade landscaping equipment. In this case, he can take deduction

 

under business improvement expense and depreciation of the same.

 

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Sep 18, 2020

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