Tom, a cash basis sole proprietor, provides the following information: $\begin{array}{llcc}
\text { Gross receipts } &\$30,000 \
\text { Dividend income (on personal investments) } &200\
\text { Cost of sales} &15,400\
\text { Other operating expenses } &3,000\
\text {State busines s taxes paid } &300\
\end{array}$

What amount should Tom report as net earnings from self-employment?

Question

Tom, a cash basis sole proprietor, provides the following information: $\begin{array}{llcc}
  \text { Gross receipts } &\$30,000  \
 \text { Dividend income (on personal investments) } &200\
 \text {  Cost of sales} &15,400\
 \text { Other operating expenses } &3,000\
 \text {State busines s taxes paid  } &300\
\end{array}$

What amount should Tom report as net earnings from self-employment?

Quizplus · Accepted Answer

To calculate Tom's net earnings from self-employment, we need to subtract his deductible expenses from his gross receipts. Thus, we have:

Gross receipts: $30,000

Cost of sales: $15,400

Other operating expenses: $3,000

State business taxes: $300

Deductible expenses: $15,400 + $3,000 + $300 = $18,700

Net earnings from self-employment: $30,000 - $18,700 = $11,300

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