Mollie Gee is the sole proprietor of a cash basis, Internet based, business providing handywoman advice and tips for do-it-yourself home improvement wannabes.
Her site, HandyWomanRocks.com, also serves as a look up portal for reputable contractors providing a wide variety of home repair services, similar to Angieâ€™s List. Mollie receives fees from the contractors for referrals that result in jobs from her site.
Since HandyWomanRocks.com is such a popular site, Mollie receives advertising revenue from Home Depot, Lowes, Tractor Supply, Ace Hardware and Spenard Builder Supply, among other companies. She records the revenue as she receives it. Sometimes she receives revenue and then is obligated to host the advertising for a certain period after the payment.
Mollie has published an ebook, â€œDIY for Dummies,â€ sold on her website. Mollie also has a DIY blog.
For the current year, she has the following revenue and expenses:
Revenue from advertising on her site^$ 56,500
Revenue from referrals 28,550
Revenue from book sales 9,900
Revenue billed but not received (for services not yet rendered) 2,001
Home improvement conference registrations* 4,500
Travel to conferences 1,250
Hotels at conferences 420
Meals (at conferences and during travel to conferences) 190
Accounting fees 1,200
High Speed Internet fees 1,850
Legal fees 625
One-time development costs for â€œDIY for Dummiesâ€ 6,800
Automobile maintenance (Tundra) 750
Office supplies 240
Advertising on other sites 4,000
Health Insurance*** 3,260
Community College course** 1,100
Book/software for CC course (required)** 225
Individual Retirement Account contribution*** 5,500
Office Rent**** 12,000
Property Insurance***** 6,000
^Of this amount, $15,000 is from a contract with Spenard Builders Supply. Under this contract, signed on September 26, 2015, Mollie will host their advertising for two years on her website.
*These are continuing education courses for Mollie.
**This was an advanced Java course.
****Mollie paid rent for the current year on January 1 at a rate of $1,000 per month.
*****Mollie purchased the policy on September 1 and paid for 2 years
In addition to the above information, Mollie has provided the following information for her vehicle, a 2014 Toyota Tundra Hybrid, which she uses for both business and personal purposes. She uses an app to keep track of her mileage. In the past year, Mollie drove 3,000 business miles 10,000 personal miles, and 150 miles for charity. In past years, Mollie kept track of her mileage in a written log, but never kept records for her actual vehicle expenses, and never took any depreciation on her truck.
While Mollie is working, she usually wears her uniform, khaki pants and a specially designed shirt that comes from LL Bean. These shirts are button front, red (Troy red, as Mollie is a Trojan through and through) with long sleeves and an embroidered logo reading â€œHandyWomanRocks.comâ€. Sometimes though, when she canâ€™t sleep, she works in her pajamas in the middle of the night.
Based on the information provided above, fill out Mollieâ€™s 2016 Form 1040 Schedule C, as of December 31, 2016.
Mollieâ€™s employer ID number is 05-7861342 and her principal business code is 541990.
Her business is located at 5678 Hammer and Nail Blvd, Boston, Massachusetts.
Answer the following:
1. Are there any taxes Mollie is responsible for paying in relation to her business? Where would they be reported?
2. Calculate any taxes from #1.
3. If there are any items above that are not reported on Schedule C, list those items. Identify where they should be reported, or if they should not be reported. If they should not be reported, why not?