COMPREHENSIVE PROBLEM 0-48 John and Ellen Brite (SSN 000-00-1111 and 000-00-2222, respectively) are married and file a joint return. They have no dependents. John owns an unincorporated specialty elec- trical lighting retail store, Brite-On. Brite-On had the following assets on January 1,2017: Cost S100,000 30,000 S5/bulb Assets Old store building purchased April 1, 2002 Equipment (7-year recovery) purchased January 10, 2012 Inventory valued using FIFO method: 4,000 light bulbs Brite-On purchased a competitor's store on March 1,2017, for $107,000. The purchase price included the following: New store building Land Equipment (5-year recovery) Inventory: 3,000 light bulbs $60,000 (FMV) 18,000 (FMV) 11,000 (FMV) $6/bulb (cost) On June 30, 2017, Brite-On sold the 7-year recovery period equipment for $12,000 Brite-On leased a car for $500/month beginning on January 1, 2017. The car is used 100% for business and was driven 14,000 miles during the year. Brite-On sold 8,000 light bulbs at a price of $15/bulb during the year. Also, Brite-On made additional purchases of 4,000 light bulbs in August 2017 at a cost of $7/bulb. Brite-On had the following revenues (in addition to the sales of light bulbs) and additional expenses: Service revenues Interest expense on business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries $64,000 4,000 3,800 3,300 2,800 24,000 John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash) $4,500 3,800 4,000 5,000 600 The Brites received interest income on a bank savings a made four $5,000 quarterly estimated tax payments. For self-empl assume John spent 100% of his time at the store Additional Facts: . Equipment acquired in 2012: The Brites elected out of bonus depreciation ccount of $275. John and Ellen tax while Ellen spends no time at the store. and did not elect Sec. 179 Chapter 10 Equipment acquired in 2017: The Brites elected Sec. 179 to expense the cost of the 5-year equipment Assume that the lease inclusion rules require that Brite-On reduce its deductible lease expense by $8. Compute the Brite's taxable income and balance due or refund for 2017 COMPREHENSIVE PROBLEM John and Ellen Brite (SSN 000-00-1111 and 000-00-2222, respectively) are married and file a joint return. They have no dependents. lohn owns an unincorporated specialty u trical lighting retail store, Brite-On. Brite-On had the following assets on J 0-48 January 1, 2017 Assets Cost Old store building purchased April 1, 2002 Equipment (7-year recovery) purchased lanuary 10, 2012 Inventory valued using FIFO method: 4,000 light bulbs $100,000 30,000 SS/bulb rite ia competitor's store on March 1, 2017, for $107,000. The purchase included the following: New store building Land s60,000 (FMV) 18,000 (FMV) Equipment (5-year recovery) 11,000 (FMV) Inventory: 3,000 light bulbs $6/bulb (cost) On June 30, 2017, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a car for $500/month beginning on January 1, 2017. The car is used 100% for business and was driven 14,000 miles during the year. Brite-On sold 8,000 light bulbs at a price of $15/bulb during the year. Also, Brite-On made additional purchases of 4,000 light bulbs in August 2017 at a cost of $7/bulb. Brite-On had the following revenues (in addition to the sales of light bulbs) and additional expenses: $64,000 4,000 Service revenues Interest expense on business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries 3,300 2,800 24,000 John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash)600 $4,500 3,800 4,000 5,000 The Brites received interest income on a bank savings account of $275. John and Ellen made four $5,000 quarterly estimated tax payments. For self-employment tax purposes assume ohn spent 100% of his time at the store while Ellen spends no time at the store. Additional Facts: . Equipment acquired in 2012: The Brite s elected out of bonus depreciation and did not elect Sec. 179 36 IndividualsChapter 10 . Equipment acquired in 2017: The Brites elected Sec. 179 to expense the cost of the 5-year equipment. . Assume that the lease inclusion rules require that Brite-On reduce its deductible lease Compute the Brite's taxable income and balance due or refund for 2017. expense by $8. COMPREHENSIVE PROBLEM 0-48 John and Ellen Brite (SSN 000-00-1111 and 000-00-2222, respectively) are married and file a joint return. They have no dependents. John owns an unincorporated specialty elec- trical lighting retail store, Brite-On. Brite-On had the following assets on January 1,2017: Cost S100,000 30,000 S5/bulb Assets Old store building purchased April 1, 2002 Equipment (7-year recovery) purchased January 10, 2012 Inventory valued using FIFO method: 4,000 light bulbs Brite-On purchased a competitor's store on March 1,2017, for $107,000. The purchase price included the following: New store building Land Equipment (5-year recovery) Inventory: 3,000 light bulbs $60,000 (FMV) 18,000 (FMV) 11,000 (FMV) $6/bulb (cost) On June 30, 2017, Brite-On sold the 7-year recovery period equipment for $12,000 Brite-On leased a car for $500/month beginning on January 1, 2017. The car is used 100% for business and was driven 14,000 miles during the year. Brite-On sold 8,000 light bulbs at a price of $15/bulb during the year. Also, Brite-On made additional purchases of 4,000 light bulbs in August 2017 at a cost of $7/bulb. Brite-On had the following revenues (in addition to the sales of light bulbs) and additional expenses: Service revenues Interest expense on business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries $64,000 4,000 3,800 3,300 2,800 24,000 John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash) $4,500 3,800 4,000 5,000 600 The Brites received interest income on a bank savings a made four $5,000 quarterly estimated tax payments. For self-empl assume John spent 100% of his time at the store Additional Facts: . Equipment acquired in 2012: The Brites elected out of bonus depreciation ccount of $275. John and Ellen tax while Ellen spends no time at the store. and did not elect Sec. 179 Chapter 10 Equipment acquired in 2017: The Brites elected Sec. 179 to expense the cost of the 5-year equipment Assume that the lease inclusion rules require that Brite-On reduce its deductible lease expense by $8. Compute the Brite's taxable income and balance due or refund for 2017 COMPREHENSIVE PROBLEM John and Ellen Brite (SSN 000-00-1111 and 000-00-2222, respectively) are married and file a joint return. They have no dependents. lohn owns an unincorporated specialty u trical lighting retail store, Brite-On. Brite-On had the following assets on J 0-48 January 1, 2017 Assets Cost Old store building purchased April 1, 2002 Equipment (7-year recovery) purchased lanuary 10, 2012 Inventory valued using FIFO method: 4,000 light bulbs $100,000 30,000 SS/bulb rite ia competitor's store on March 1, 2017, for $107,000. The purchase included the following: New store building Land s60,000 (FMV) 18,000 (FMV) Equipment (5-year recovery) 11,000 (FMV) Inventory: 3,000 light bulbs $6/bulb (cost) On June 30, 2017, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a car for $500/month beginning on January 1, 2017. The car is used 100% for business and was driven 14,000 miles during the year. Brite-On sold 8,000 light bulbs at a price of $15/bulb during the year. Also, Brite-On made additional purchases of 4,000 light bulbs in August 2017 at a cost of $7/bulb. Brite-On had the following revenues (in addition to the sales of light bulbs) and additional expenses: $64,000 4,000 Service revenues Interest expense on business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries 3,300 2,800 24,000 John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash)600 $4,500 3,800 4,000 5,000 The Brites received interest income on a bank savings account of $275. John and Ellen made four $5,000 quarterly estimated tax payments. For self-employment tax purposes assume ohn spent 100% of his time at the store while Ellen spends no time at the store. Additional Facts: . Equipment acquired in 2012: The Brite s elected out of bonus depreciation and did not elect Sec. 179 36 IndividualsChapter 10 . Equipment acquired in 2017: The Brites elected Sec. 179 to expense the cost of the 5-year equipment. . Assume that the lease inclusion rules require that Brite-On reduce its deductible lease Compute the Brite's taxable income and balance due or refund for 2017. expense by $8