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Form 1040 schedule C and Form 1040 Schedule SE

83. Stephanie Zane is the sole proprietor of Shcar Madness, a hair salon. Her revenue comes from two sources, haircuts and the sale of hair products. Stephanie has three employees whose compensation consists of a weekly salary and a 40 percent commission on the services they provide to the customer. Stephanie uses a hybrid method of accounting-the cash method for haircuts and the accrual method for sales of hair products. For the current year she has the following revenue and expenses: Revenue from haircuts $141,650 Revenue from the sale of products 36,240 Beginning inventory of product 1,756 Ending inventory of product 1,469 Product purchased 18,345 Gross saharies (including commission) 66,000 Social Security taxes 5,049 Employee withholding: Social Security taxes 5,049 Federal taxes 15,200 State taxes 4,200 Other payroll taxes 375 Advertising 1,200 Rent 12,100 Utilities 1,600 Phone 570 Postage 220 Accounting fees 1,200 Legal fees 625 Complete Form 1040 Schedule C (Profit or Loss From Business) and Form 1040 Schedule SE (Self-Employment Tax) using the above information. Stephanie's Social Security number is 123-62-7897, her employer ID number is 05-9987561, and her business address is 99 Fortin Lane, Metuchen, New Jersey 07865. Forms and instructions can be downloaded from the IRS website (www.irs.gov)

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