Olga's proprietorship earned a net profit of $95,000 during the year and she withdrew $70,000 of this profit. Olga must report $70,000 net income from the proprietorship on her individual income tax return (Form 1040).

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Net income from a proprietorship is the amount left over after all expenses and withdrawals have been made, and is reported on the owner's individual income tax return. In this case, Olga withdrew $70,000 of the $95,000 net profit, meaning that her net income from the proprietorship is only $25,000 ($95,000 - $70,000). Olga must report this $25,000 net income on her individual income tax return.

Olga's Proprietorship Earned a Net Profit of $95,000 During the Year