CoMprehensiveproBleM i:10-48 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, 2016: Assets Cost Old store building purchased April 1, 2001 Equipment (7-year recovery) purchased January 10, 2011 Inventory valued using FIFO method: 4,000 light bulbs 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, 2016, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a $30,500 car for $500/month beginning on January 1, 2016" 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 2016 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 or business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash) $64,000 4,000 3,800 3,300 2,800 24,000 $4,500 ,800 4,000 5,000 600 The Brites received interest income on a bank savings account of $275. John and Elen made four $5,000 quarterly estimated tax payments. For self-employment tax pur-poses, assume John spent 100% of his time at the store while Ellen spends no time at the store, additional Facts: Equipment acquired in 2011: The Brites elected out of bonus depreciation and did not elect Sec. 179 Equipment acquired in 2016: The Brites elected Sec. 179 to expense the cost of the 5-year equipment but elected out of bonus depreciation. 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 2016 CoMprehensiveproBleM i:10-48 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, 2016: Assets Cost Old store building purchased April 1, 2001 Equipment (7-year recovery) purchased January 10, 2011 Inventory valued using FIFO method: 4,000 light bulbs 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, 2016, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a $30,500 car for $500/month beginning on January 1, 2016" 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 2016 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 or business loans Auto expenses (gas, oil, etc.) Taxes and licenses Utilities Salaries John and Ellen also had some personal expenses: Medical bills Real property taxes State income taxes Home mortgage interest Charitable contributions (cash) $64,000 4,000 3,800 3,300 2,800 24,000 $4,500 ,800 4,000 5,000 600 The Brites received interest income on a bank savings account of $275. John and Elen made four $5,000 quarterly estimated tax payments. For self-employment tax pur-poses, assume John spent 100% of his time at the store while Ellen spends no time at the store, additional Facts: Equipment acquired in 2011: The Brites elected out of bonus depreciation and did not elect Sec. 179 Equipment acquired in 2016: The Brites elected Sec. 179 to expense the cost of the 5-year equipment but elected out of bonus depreciation. 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 2016