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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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line 5 said subtract line 4 from line 3. how can i do this ...

Customer Question

line 5 said subtract line 4 from line 3. how can i do this line 4 is larger than line 3
Submitted: 6 years ago.
Category: Tax
Expert:  Ed Johnson replied 6 years ago.

Dear Joan,

Which form are you working with?

Customer: replied 6 years ago.
schedule c profit or loss from business
Expert:  Ed Johnson replied 6 years ago.

Dear Joan,

If the math is done right, you may indeed have a negative figure.

Line one: Line on are your gross receitps that you have received from doing business operations.

LIne 2: Then you enter any returns and allowances you gave to customers.

Line 3: You subtract the returns, allowances (i.e. refunds, etc) from the gross receipts (line 1 - line 2). This will yield a net receitps.

Line 4: is where you entre the cost of goods sold. Hopefully, the cost of goods sold, taken from line 42 of page 2, would be less than your income. For example: If you have your price point right, the a product that cost you say,, 16 dollars to make, would be selling between 26 and 36 dolllars. However, in some industries, such as the car industy, the margin is only 5%. It is possible to sale things at a loss, especially for a new business.

In line five: you subtract tract the cost of goods sold which you entered on Line 4 from your entry on line 3, which hopefully will yield a positive nubmer. However, in your situaion, you will have a negative number. (or gross loss rather than a gross profit).

So line 5 will be a - number:

For example:

  • Line 3 = 10,000
  • Line 4= 15,000
  • Line 5 = 10,000 -(15,000)= -5,000

 

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Ed Johnson and 6 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
schedule c profit and loss from business Line 29 Tentative profit (loss ) subtract line 28 from line 7. line 7 is a negitive(1308.20) line 28 total expenses is 6635.06. what should i put in line 29 and line 30
Customer: replied 6 years ago.
I am trying to ask another question
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

I apologize for not getting back to you sooner. I had an emergency to tend to.

I see that you appropriately entered a second question, which was correctly answered by another expert.

Please let me know if you require additional clarification.

 

Ed

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