Answer:
$180 taxable income in 2020, and $1,260 taxable income in 2021.
Explanation:
Calculation to determine what BugLess should report As a result of the contract
Calculation for the TAXABLE INCOME IN 2020
Using this formula
2020 Taxable income=Service call costs*Numbers of service calls
Let plug in the formula
2020 Taxable income=$60*3
2020 Taxable income=$180
Calculation for the TAXABLE INCOME IN 2021
Using this formula
2021 Taxable income=Prepaid Amount-(Service call costs*Numbers of service calls)
Let plug in the formula
2021 Taxable income=$1,440-($60*3)
2021 Taxable income=$1,440-$180
2021 Taxable income=$1,260
Therefore As a result of the contract, BugLess should report:$180 taxable income in 2020, and $1,260 taxable income in 2021.