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[HELP] Working on a tax return assignment for class

Discussion in 'BBS Hangout' started by mrm32, Apr 3, 2011.

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  1. mrm32

    mrm32 Member

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    So in one of my tax preparation classes one of our assignments is to work a tax return from information that the professor has given to us. Of course this is no simple tax return by any means so I come to Clutchfans asking for help.

    I've completed most of it but I'm just not sure about COGS. This person has a business and her sales for the year were $14,000. Purchases for the year were $7,000 and ending inventory was $500. Now, we're suppose to this on an H&R Block software that comes equipped with the book and on the screen I'm on it has a space to put:

    Purchases
    Labor
    Materials and Supplies
    Other Costs

    Of course I put in the purchases but I'm confused as to what to do with the ending inventory. Do I take the difference ($6,500) and input it in materials and supplies? I simply do not know what to do at this point.

    And another part was that she paid an estimated $1,000 in federal taxes for this business. I have no idea where to put that. One of my classmates told me on Line 61 but would it go anywhere on their SE Form?

    Any help is greatly appreciated. TIA.
     
    #1 mrm32, Apr 3, 2011
  2. Xerobull

    Xerobull ...and I'm all out of bubblegum
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    Post this on Cramster.com
     
    #2 Xerobull, Apr 3, 2011
  3. juicystream

    juicystream Member

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    I can't tell you how to input the information, but your COGS would be purchases + beginning inventory - ending inventory (though given how small they are, and likely being on a cash basis, they are not required to maintain an inventory and could write-off the whole amount. I doubt this is what your teacher would want you to do).

    Estimated tax payments are irrelevant to the schedule C itself. A federal estimate will only show up on page 2 of the 1040 in the payments section.
     
    #3 juicystream, Apr 3, 2011
  4. mrm32

    mrm32 Member

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    Thanks for the help guys.
     
    #4 mrm32, Apr 3, 2011
  5. RocketDonut

    RocketDonut Member

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    <iframe title="YouTube video player" width="480" height="390" src="http://www.youtube.com/embed/i8LOLswfTkQ?rel=0" frameborder="0" allowfullscreen></iframe>

    :)
     
    #5 RocketDonut, Apr 3, 2011
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