Comprehensive Problem 8-1

Sherry Hopson owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95-1234321 and her Social Security number is 123-45-6789. Sherry keeps her books on an accrual basis. The income and expenses for the year are:

Gross sales			$351,700
Returns and allowances			4,000
Expenses:
Beginning inventory (at cost)	$ 84,300
Add: purchases	100,700
Cost of goods available for sale	185,000
Less: ending inventory (at cost)	75,000
Cost of goods sold			$110,000
Rent			23,800
Insurance			1,500
Legal and accounting fees			2,800
Payroll			37,200
Payroll taxes			3,440
Utilities			1,850
Office supplies			750
Advertising			2,100

Sherrys bookkeeper has provided the book-basis fixed asset roll forward to be used in computing the depreciation. The tax lives of the assets are the same as the book lives shown in the fixed asset schedule. The truck is not considered a passenger automobile for purposes of the luxury automobile limitations. No Section 179 election is made. For tax purposes, Sherry elected out of bonus depreciation in all years except 2018.

Sherrys bookkeeper has provided the following book-basis fixed asset rollforward:

Hopson Retail Fixed Asset Rollforward 12/31/2018 (book basis)
		DEPR		COST		2016	2017	2018		ACCUM		NET BOOK
ASSET	IN SERVICE	METHOD	LIFE	BASIS		DEPR	DEPR	DEPR		DEPR		VALUE
CASH REGISTER	2/15/2016	SL	5	9,800.00		1,796.67	1,960.00	1,960.00		5,716.67		4,083.33
2016 TOTAL ADDITIONS				9,800.00		1,796.67	1,960.00	1,960.00		5,716.67		4,083.33
RETAIL FIXTURES	10/12/2017	SL	7	4,500.00			160.71	642.86		803.57		3,696.43
FURNITURE	10/12/2017	SL	7	3,600.00			128.57	514.29		642.86		2,957.14
2017 TOTAL ADDITIONS				8,100.00		-	289.28	1,157.15		1,446.43		6,653.57
TOTAL				17,900.00		1,796.67	2,249.28	3,117.15		7,163.10		10,736.90
DELIVERY TRUCK	6/1/2018	SL	5	32,000.00				3,733.33		3,733.33		28,266.67
DESK AND CABINETRY	6/1/2018	SL	7	17,000.00				1,416.67		1,416.67		15,583.33
COMPUTER	6/1/2018	SL	5	3,500.00				408.33		408.33		3,091.67
2018 TOTAL ADDITIONS				52,500.00		-	-	5,558.33		5,558.33		46,941.67
TOTAL				70,400.00		1,796.67	2,249.28	8,675.48		12,721.43		57,678.57

Required: Complete Sherry's Schedule C and Form 4562.

Make realistic assumptions about any missing data.

If an amount box does not require an entry or the answer is zero, enter 0.

If required round any amount to the nearest dollar.

I have a majority of schedule C filled out but I need help figuring out Line 13 along with

Form 4562 Line 14 - special depreciation allowance