David purchased a deli shop on February 1st of last year and began to operate it as a sole proprietorship. David reports his personal taxes using the cash method over a calendar year, and he wants to use the cash method and fiscal year for his sole proprietorship. He has summarized his receipts and expenses through January 31st of this year as follows: ReceiptsExpensesFebruary through December last year$112,000$84,500January this year10,4006,200What income should David report from his sole proprietorship?
What will be an ideal response?
$27,500 = $112,000 ? $84,500.
A sole proprietorship must report on the same year-end as the proprietor-in this case a calendar year.
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