Question

Niall is self-employed. During the year, he had the following business income and expenses:
Gross receipts, $19,150.
Cost of goods sold, $5,000.
Advertising, $1,000.
Legal and professional fees, $280.
Office expense, $125.
Supplies, $310.
Business license, $100.
Utilities, $420.
What is his gross income for the tax year?
$11,915
$14,150
$16,915
$19,150

Answer 1

$14,150

Gross income from the business = gross receipts − cost of goods sold = $19,150 − $5,000 = $14,150. (The other listed items are operating expenses and reduce net profit, not gross income.)