The following information pertains to Simon, a cash basis sole proprietor, for the current tax year: Gross receipts from business $120,000 Dividend income from personal investments 800 Cost of goods sold 60,000 Other business operating expenses 12,000 State business taxes 1,200 Federal self-employment tax 6,613 What is Simon's net income from his sole proprietorship on his California return

Net Income = $46,800

Explanation:

Given:

Gross income = $120,000

Personal Dividend Income = $800

Cost of goods sold = $60,000

Operating expenses = $12,000

State business taxes = $1,200

Federal self-employment tax = $6,613

Computation of net income:

Particular                                 Amount    

Gross income                          $120,000

Less: Cost of goods sold        $60,000

Less: Operating expenses     $12,000

Less: State business taxes     $1,200    

Net income                              $46,800  

Note: other are not included in net income.

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