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Dex owns and operates Feeling Rocky Inc (FR), a San Diego-based climbing gym. In 2022, FR reported $1,432,000 of book income on their audited

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Dex owns and operates Feeling Rocky Inc (FR), a San Diego-based climbing gym. In 2022, FR reported $1,432,000 of book income on their audited financial statements. They made $350,000 of estimated tax payments (prepayments) throughout the tax year. They use the accrual method for tax and book purposes, and they are a calendar-year taxpayer. Included in the book income and expense items are the following: a. FR expensed $27,000 for book purposes related to their allowance for doubtful accounts. Their actual bad debt write-offs ended up being much higher because the global pandemic negatively impacted many of their customers. For tax purposes they will write-off $60,500. b. FR expensed $111,000 of depreciation on cars for book purposes. Because of the TCJA's 100% bonus depreciation, they can deduct significantly more related to their 2022 asset acquisitions. For tax purposes they can deduct $335,000 in depreciation. c. FR paid $4,500 in fines related to traffic violations. d. FR received $950,000 in rental income during the year. e. FR hosts monthly dinners for climbing industry executives and agents. They spent a total of $58,000 over the year on these industry dinners ($28,000 from restaurants). After the dinners Dex would take the most important executives to sporting events to further persuade them to do business with FR. These sport events cost the company $90,000. Dow on ER's CEO in a

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