Tom, a cash basis sole proprietor, provides the following information: $$\begin{array} { l r }
\text { Gross receipts } & \$ 30,000 \
\text { Dividend income (on personal investments) } & 200 \
\text { Cost of sal es } & 15,400 \
\text { Other operating expenses } & 3,000 \
\text { State business taxes paid } & 300
\end{array}$$ What amount should Tom report as net earnings from self-employment?

Question

Tom, a cash basis sole proprietor, provides the following information: $$\begin{array} { l r } 
\text { Gross receipts } & \$ 30,000 \
\text { Dividend income (on personal investments) } & 200 \
\text { Cost of sal es } & 15,400 \
\text { Other operating expenses } & 3,000 \
\text { State business taxes paid } & 300
\end{array}$$ What amount should Tom report as net earnings from self-employment?

Quizplus · Accepted Answer

Net earnings from self-employment are calculated as gross receipts minus cost of sales, other operating expenses, and state business taxes. Thus, $30,000 - $15,400 - $3,000 - $300 = $11,300. Dividend income is not included in self-employment earnings.

Tom, a Cash Basis Sole Proprietor, Provides the Following Information