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Hello i need help preparing 2020 tax return, Form 1040, Schedules 1, 2, C, and SE, and Forms 4562 and 4797. Thank you. John and
Hello i need help preparing 2020 tax return, Form 1040, Schedules 1, 2, C, and SE, and Forms 4562 and 4797. Thank you.
John and Ellen Brite are married, file a joint return, and are less than 6S years old. They have
no dependents and clairn the standard deduction. John owns an unincorporated specialty elec-
trical lighting retail store, Brite-On. Brite-On had the following assets on January 1, 2020;
Assets
Cost
Old store building purchased April 1, 2005
$100,000
Equipment (7-year recovery) purchased January 10, 2015
30.000
Inventory valued using FIFO method: 4,000 light bulbs
$5/bulb
Brite-On purchased a competitor's store on March 1, 2020, for $206,000. The purchase
price included the following:
New store building
Land
Equipment (5-year recovery)
Inventory: 3,000 light bulbs
$115,000 (EMV)
28,000 (FMV)
45,000 (FMV)
S 6/bulb (cost)
On June 30, 2020, Brite-On sold the 7-year recovery period equipment for $12,000.
Brite-On leased a car for $860/month beginning on June 1, 2020. 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 vear. Also, Brite-On
made additional purchases of 4,000 light bulbs in August 2020 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, ete.)
Taxes and licenses
Utilities
Salaries
$94.000
16.000
4,800
3,300
2,800
36.000
Ellen receives $42,000 of wages from employment elsewhere, from which $4,000 of fed-
eral income taxes were withheld. ohm and Ellen made four $3,100 quarterly estimated
tax payments. For self-employment tax purposes, assume lohn spent 100* of his time at
the store while Ellen spends no time at the store
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