Austin is the sole owner of a small LLC, specializing in manufacturing hand sanitizer. Austin sends you the following income/expenses items a week ago:

Income from the business: $1 million

Expenses:

Factory: $300k purchased on 9/30/2022.

Machine: $150k purchased on 7/31/2022

Employee salary: $300k (1 full-time factory manager = $50k, 15 part-time contractors, $10k each. In addition, Austin also hires his dad working as a vice-manager at the factory and pays his dad $100k. Through some research, you know that the average salary for that same position is about $45k)

This year is an extremely profitable year for Austins business. For that reason, Austin decided to host an employee appreciation year-end party to celebrate. Austin believes that he would need to host quite a kick-ass party because his annual pay for the employees are quite low. In addition, a fun and special party would be helpful to boost employee morale. Austin decides to rent out a small yacht for a night of 12/30/2022 and host the company party there. Below is the cost of the party:

- Yacht rental = $30k

- Food and Drinks served on board at the party = $20k

Utilities: $30k

A) Assume there are no depreciation expenses allowed (which also mean no Section 179, and no Bonus depreciation), calculate Andrews AGI. Show details calculation and explanation.

B) How would your answer in a) change if we now account for asset depreciation expenses (including 179, Bonus depreciation, and MACRS)? Show details calculation and explanation.

C) It seems like Austin is practicing some tax strategy in the year of 2022. Identify at least 1 strategy that Austin used and explain how it helps Austin to reduce his tax liability?