Compute the net taxable income from Nelson Engineering.

Tony and Jeannie provide you with the following information regarding their upcoming 2022 tax return:

Tony Nelson is an aerospace engineer he runs an engineering firm, Nelson Engineering (NE), as a sole proprietorship since 2010.

NE has very lucrative contracts with numerous aerospace companies and during 2022 it will earn $647,000.

NE rents an office downtown where they meet with clients and conducts business. The rent includes all utilities. NE will pay $36,000 in rent expense for 2022. The landlord offered to maintain the same yearly rent cost and Tony could receive an additional month's rent for free if he prepays his 2023-year rent in advance. Tony has agreed and will pay an additional $36,000 on December 1, 2022, to cover January 2023 through January 2024 rent.

NE obtained a business loan from SunTrust Bank and paid $2,500 in prepaid interest for July 1, 2022 through June 30, 2023.

NE has a few employees, including an electrical engineer, a part-time engineering intern and an office manager. The combined wages for these employees will be $221,000. Payroll taxes for these employees is estimated as $18,000.

Tony took different business clients to see several home Miami Heat games during January and February of 2022 followed by dinners at nearby restaurants where business was discussed. The meals were not considered lavish. The total cost for the Heat tickets and accompanying meals were $1,400 and $700, respectively.

In April 2022, Tony flew to a two-day engineering convention held in Phoenix, AZ requiring a two-night hotel stay. While there, Tony noted that the convention dress code was business formal when he thought it would be casual. Tony immediately purchased a business suit for $400 (not considered lavish) at a nearby department store. All food costs were covered by the convention organizers. Other trip costs that Tony paid were airplane ticket $480 and hotel lodgings cost $160/night for two nights.

The depreciation for the year on the fixed assets owned by NE are estimated to total $4,500.

All of NEs business transactions are properly documented and supported by receipts/invoices. In addition to deductible portion of the items listed above the business will have an additional $3,800 of deductible other expenses.