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Bravo & Bravo Q & A: How is income or loss from a business reported?

BRAVO & BRAVO

September 4, 2019

Free Tax Tips

Q1: How is income or loss from a business reported?

Answer 1: A Taxpayer who operates a business as a sole proprietor must figure income or loss from that business on Schedule C (F1040), Profit or Loss From Business & report it on Line 12 of F1040, Schedule 1, Additional Income & Adjustments to Income.

Q2: What expenses can be deducted by a business?

Answer 2: A deduction is allowed for all ordinary and necessary expenses paid or incurred during the tax year in carrying on a trade or business. However, in order to be deductible, the expenses must be reasonable in amount. Trade or business expenses are deductible from gross income on Schedule C.

Q3: What method of accounting is used for a business?

Answer Q3 : Generally, a taxpayer may choose one of the following methods of accounting?

1. The cash method

2. An accurate method

3. Any other method permitted by the tax code and regulations

4. Any combination of the foregoing methods, as permitted by the IRS.

Source: Wolters Kluwer. CCH Publications, “2018 Taxes Made Easy. ”


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Don’t Forget: October 15, 2019 is the Last Day for filing 2018 Income Tax Returns Form 1040….

BRAVO & BRAVO

August 28, 2019

Deadline: October 15, 2019 For Individuals

Don’t Forget: October 15, 2019 is the Last Day for filing 2018 income tax returns Form 1040 by calendar-year individuals who obtained an automatic six-month filing extension.

Deadline: October 15, 2019 For Corporations

Last Day for filing 2018 income tax return by calendar-year C-Corporations (Form 1120) that Obtained an automatic filing extension using Form 7004***

***Although Code Sec. 6081(b) provides for a five -month automatic extension for calendar year year C corporations for 2018 returns, the IRS is granting an automatic six-month extension under the authority of Code Sec. 6081(a), as reflected in the Instructions to Form 7004.

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