Jack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients, and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year's resolution, Jack decided he would finally do it. Jack put his business plan together, and, on January 1 of this year, Jack opened his doors for business as a C corporation called Geo-Jack (GJ). Jack is the sole shareholder. Jack reported the following financial information for the year (assume GJ reports on a calendar year, uses the accrual method of accounting, and elects to account for inventory). 1. In January, GJ rented a small business office about 12 miles from Jack's home. GJ paid $10,600, which represented a damage deposit of $4,240 and rent for two years ($3,180 annually). 2. GJ earned and collected $300,000 performing geological-related services and selling its specialized digging tool. 3. GJ received $60 interest from municipal bonds and $2,120 interest from other investments. 4. GJ purchased some new equipment in February for $43,500. It claimed depreciation on these assets during the year in the amount of $6,690. 5. GJ paid $7,100 to buy luxury season tickets for Jack's parents for State U football games. 6. GJ paid Jack's father $10,400 for services that would have cost no more than $6,240 if Jack had hired any other local business to perform the services. While Jack's dad was competent, he does not command such a premium from his other clients. 7. In an attempt to get his name and new business recognized, GJ paid $7,100 for a one-page ad in the Geologic Survey. It also paid $15,200 in radio ads to be run through the end of December. 8. GJ leased additional office space in a building downtown. GJ paid rent of $27,500 for the year. 9. In November, Jack's office was broken into and equipment valued at $5,100 was stolen. The tax basis of the equipment was $5,600. Jack received $2,040 of insurance proceeds from the theft. 10. GJ incurred a $4,050 fine from the state government for digging in an unauthorized digging zone