I need help with the answer to Chapter 10 comprehensive problem I:10-48 of Pearson's Federal Taxation 2019 Individuals ISBN-10:0134739671

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, 2017: Assets Old store building purchased April 1, 2002 Cost $100,000 Equipment (7-year recovery) purchased January 10, 2012 30,000 Inventory valued using FIFO method: 4,000 light bulbs $5/bulb Brite-On purchased a competitors store on March 1, 2017, for $107,000. The purchase price included the following: New store building Land $60,000 (FMV) 18,000 (FMV) Equipment (5-year recovery) 11,000 (FMV) Inventory: 3,000 light bulbs $ 6/bulb (cost) On June 30, 2017, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a car for $500/month beginning on January 1, 2017. 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 2017 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 $64,000

Interest expense on business loans 4,000

Auto expenses (gas, oil,etc.) 3,800

Taxes and licenses 3,300

Utilities 2,800

Salaries 24,000

John and Ellen also had some personal expenses:

Medical bills $4,500

Real property taxes 3,800

State income taxes 4,000

Home mortgage interest 5,000

Charitable contributions (cash) 600

The Brites received interest income on a bank savings account of $275. John and Ellen made four $5,000 quarterly estimated tax payments. For self-employment tax purposes, assume John spent 100% of his time at the store while Ellen spends no time at the store.

Additional Facts:

Equipment acquired in 2012: The Brites elected out of bonus depreciation and did not elect Sec. 179.

*Equipment acquired in 2017: The Brites elected Sec. 179 to expense the cost of the 5-year equipment.

Assume that the lease inclusion rules require that Brite-On reduce its deductible lease expense by $8. Compute the Brites taxable income and balance due or refund for 2017