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Question on REG Becker simulation - R1 Testlet 3 Q.#7

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#1 dmurillo3



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Posted 29 June 2013 - 07:28 PM


7. Schedule C revenues of $50,000, COGS of $10,000, Office Supplies of $1,000, Business Meals of $4,000, FICA taxes of $2,600, and Salary to the Sole Proprietor of $25,000







(2,000) 50% Meals


Net amount reported as a single line item for business income


FICA taxes of $5,200 is approximate (actual is $5,228)

50% is an adjustment to arrive at AGI and 50% is nondeductible

Salary to self is a draw (not a deduction)


As I read this, I ran into a simulation that asked to to determine what is inlcuded in net income and what is not.  So I figured the $2,600 is excluded from income, but why is the total amount excluded $5,200?  I'm not usure where in the material this was covered, and don't quite understand why we doubled it up..... Any insights?