Frederick Freeweights (age 42) owens and operates a health club called “Treadmills West.”



Frederick Freeweights (age 42) owens and operates a health club called “Treadmills West.” The business is located at 4321 Arnold Street, Alpine, CA 91901. Freddy had the following income and expenses from the health club:
Income: 214900
Business Insurance 3,800
Office Supplies 3335
Payroll 97,200
Payroll Taxes 9180
Travel 2420
Equipment & maintenance 10666
cleaning service 8500
equipment rent 22820
telephone 2780
utilities 13975
rent 30000
advertising 4750
special workout clothing and boxing gloves 750
subscription to biceps monthly magazine 120
educational seminar on weight training 775
other expenses 1830

The business uses the cash method of accounting and has no accounts receivable or inventory held for resale. Freddy has the following interest income for the year:
Bank savings: 12831
Bank bond: 10825
Freddy has been a widower for 10 years with a dependent song, Arnold, and he files his tax return as a head-of-household. Arnold is an 18 year old high school student; he does not qualify for the child credit. They live next door to the health club. Freddy does all of the administrative work for the health club out of an office in his home. The room is 150 sq ft out of the house total of 1800. Freddy pays 20,000 for rent and 4,000 in utilities.
Freddy made an estimated tax payment to the IRS of 1,000 on April 15, 2010.
Required: Complete Freddy’s federal tax return for 2010. Use Form 1040, Schedule B, Schedule C, Form 8829, and Schedule M. Use any other appropriate schedules to complete this tax return. Do not complete a Form 4562. Make realistic assumptions about any missing data.


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