4) Tax Simulation Business Meals 2020-1

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University of Houston **We aren't endorsed by this school
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ACCT 4331
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Accounting
Date
Nov 4, 2023
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2020 AICPA Newly Released Simulations—Regulation REG 2020 Simulation 504019 (TBS-002166) Unit & Module Assignment R-1, M-3 \ Task Position Number ' Task 4 Sim Task Name: Schedule C Deductions (AICPA R-2020) Type: HW Skill Level: Analysis Representative Task: RIV-C1.3 Scroll downto complete all parts of this task. As 2 sanior ccountant with the firm of Lake Park, CPA, you have been asked to work on Michael Snyder's year 1 Form 1040, 14 8 Indfvidual facome Tax Return. While preparing the Schedule €, Profif ar Loss From Business (Sole Proprietorshig)ier Michael's consulting business, a review of his trial balance raised some questions regarding wa account balances. The frial palance, Michael's email response, and copies of the supporting decumentation can be found in the exhibits above. A siaff accountant reviewed the emailand documentation-and prepared & iefieré&fimsmgmemmfitg af the éxpenses in guestion. Lukehas asked you to review the documentation and revise the letter, correctifg any errors. To revise the document, click an each segment of undertined text below and seiect the needed correction, if any, from the list provided. f the underlined text is already correct, select {Originat text] from the list. Luke Park, CPA : 426 Front Street Smintor, MA 09148 (617) 555-5555 February 21, year 2 Dear Michael, Thank you for providing the requested infarmation far your charitable contributions and business meals and entertainment trial balan¢e accounts: In anticipation of our meeting next week, we are highlighting some issues wa need 1o disCuss. The dinner at Main Street Church is deductible as a charitable confribution on your Schedule A, ftemired Dechiciions, in the amaunt of S150 48 Business Meals and Entertainiment ( We have reviewed the mvoices and receipts substartiating the business enteriainment expense of 54,725 and business meais expense of $6,660. Some of the amounts are deductible, but others are not. This letter wilt address each expense independently as follows. Page 9 of 27
2020 AICPA Newly Released Simulations—Regulation + The first invoice that we reviewed was your business lunch with Sally White at Main Sireet Restautant. The $110 is fully deductible as a business expense 48] - Inregard to the concert tickets you gave to Sonya Jones, this gxpense is nondeductible since entertainment expenses are not deductible. {8 . The 6,000 bill from Ristorante taliano 1s nondeductible despite the fact that two clients were in is limited to §183. {8 « We reviewad your invoice from the Sminton Social Club and determined that the $3,400 club dues reported on your Trial balance represents T2 months of club dues at $200 per month and the $1,000 ninimum meal tequirernent Regatding tis expense, only 81,700 of the amount expended is deductible for 1ax puiposes as a business expense & ' if you have any further questions regarding the lopics discussed in this lefter, please do not hesitate to contactus i Sincerely, i ' Luke Luke Park. CPA Page 10 of 27
2020 AICPA Newly Released Simulations—Regulation Response 1 The dinner at Main Street Church is deductible as a charitabie cantripution on your Schadule A, ftamized Deguctions. in thie amount of 150 €8 = foriginal texe] The dinner at Main Street Church is deductible as a chariiable contribution-on your Schedule A, Hermized Beductions, in the-amount of $150. i ~ The dinner at Main Street Chureh is deductible as a charitable-centribution on-Schedule C, Profitor Loss frorm Business (Sole Proprietorship), in the amount of $150. 7 The dinner at Main Street Church is deduetible as a charitable contribution on your Schedule A, trernized Deductions, in the-amount of $75 o Thedinner at Main Street Church is deductibie as a charitable contribution on Schedtde C, Frofit or Loss frarm Business (Soke-Praprietorshig), in the amount of §75. 5 The dinner at Main Street Church is deductible as-a charitable contributian.on your Sehedule A, ftemized Deductions, in the amount of 350. = The dinner at Main Street Chureh is deductible as a charitable contribution on Schedute C, Profit of L0ss from Business ¢Sole Proprietorsiip), in the amoum of 550 i i | | i Key The dinner at Main Street Church is deductibie:as a chantaple contribution onyour Schedaie A Temized Deductions, in the amount of $50. 4% Choose an eption below > fOriginal text] The dinner at Main Street Church is deductible as-a charitable contribution on your Sehedule A, iremized Deduetions; in-the amount of §1.50. O The dinner at Main Street Church is deductible as-a chartable contribution en Schedule C. Pofftor Lass from Business (Sole Proprietorship), in the amaunt of £150. O The dinner at Main Street Church is deductible as a charitable contribution an your Schedule A, fremized Deductions, in the amount of $75 5 The dinrer at Main Street Church is deductible as a charitable contribution on Schedute C. Proft or 1 0ss fiom Rusiness (Sofe Proprietorship), in the amount of §75. ® The dinner at Main Street Chusch is deductible as a chatitable contribution on your Schedule A lremized Beducrians, in the amount of $50 ) The dinner at Main Street Church is deductible as a charitable contribution on Schedule . Profit or Loss from Business (Sofe Proprietorship), in the amount 6T S50 Page 11 of 27
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