John and Ellen Brite are married and file a joint return. John owns an unincorporated specialty electrical lightning retail store, Brite-On had the following assets on January 1, 2014:

Assets: Old store building purchased April 1, 1999 $100,000

Equipment ( 7-years recovery) purchased January 10, 2009 30,000

Inventory valued using FIFO method: 4,000 light bulbs $5/bulb

Brite-On purchased a competitor's store on March 1, 2014 for $107,000. The purchase price included the following:

New store building $60,000 (FMV)

Land 18,000 (FMV)

Equipment(5-year recovery) 11,000 (FMV)

Inventory:3000 light bulbs $5/bulb (cost)

On June 30, 2014, Brite-On sold the 7-year recovery period equipment for $12,000. Brite- On leased a $30,500 car for $500/month beginning on January 1, 2014. The car is used 100% for business and was driven 14,000 miles during the year.

Brite-On sold 8,000 light bulbsat a price of $15/bulb during the year. Brite on made additional purchases of 4,000 light bulbs in August of 2014 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 expenses on business loan 4000

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 contribution (cash) 600

The Brites recived interest income on a bank saving 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 2009: The Brites elected out of bonus depreciation and did not elect Sec. 179.

Equipment acquired in 2011: The Brites elected Sec. 179 to expense the cost of the 5-year equipment but elected out of bonus depreciation.

Lease inclusion rules require that Brite-On reduce its deductible lease expense by $8

Compute the Brite's taxable income and balance due or refund for 2014.

I JUST NEED THE 1040 FORM FILLED OUT USING THE FOLLOWING INFORMATION!!!

1040:

LINE A

LINE 44

LINE 56

LINE 63

1040 page 1 & 2

ACC 175 - FA 15 Case 3 - Comprehensive Problem I: 48 (Chapter 10) (Pages 457 and 458) Due Date: 11:59 pm - Friday, December 4 Submission Method: Via Blackboard Points: 50 The following information has been provided to assist you with preparation of this tax return assignment. Failure to follow these instructions will have a significant negative effect on your grade. Please read it very carefully. 1. Taxpayer Information: John D. Brite: DOB 6-27-67 SSN: 299-67-7672 Ellen M. Brite: DOB 4-10-68 SSN: 300-68-8601 Address: 1234 Sunnybrook Drive Greenville, SC 29601 Other: They do not want to contribute to the Presidential Campaign fund. Federal Estimated Tax Payments: 4/13/14 - $5.000 6/15/14 - $5,000 9/12/14 - $5,000 1/10/15 - $5,000 Note: If you are using the Q & A format to enter the taxpayers' data, you will be prompted to enter estimated tax information after you reach the Confirm Your Information screen. You will first be asked if you would like to review your federal, state, or local estimated tax payments. Click \"Yes\" and the next screen will ask if you would like to review your 2013 federal estimated tax payments. Click \"Yes\" again and you will be taken to the screen where the federal estimated tax payment information is entered. There was no 2013 Federal overpayment applied to the 2014 tax year. The Brites did not make any state or local estimates. 2. Interest income was reported on 1099-INT, and is from Bank of America: Box 1: $275 Just enter the name of the financial institution and the amount of interest received. You do NOT need to enter any other information on the 1099-INT. 3. Home mortgage information: The Lender's name for the mortgage interest reported on Form 1098 is Greenville Credit Union. Just enter the name of the financial institution and the amount of interest paid. You do NOT need to enter any other information. 4. Schedule C (John's business only): 1 Basic Information: Line A - Retail - Other ACC 175 - FA 15 Case 3 - Comprehensive Problem I: 48 (Chapter 10) (Pages 457 and 458) Line B - Business Code: Miscellaneous Store Retailers - 453990 Line C - Business Name: Brite-On Line D - Employer ID: 31-1234567 Line E - Address: 999 Stone Drive Greenville, SC 29605 Line F - Accounting Method: Cash Line G - Materially participates Line I - Form 1099 payments? - \"No\" Part I - Income: Combine the revenue from the sale of the light bulbs with the service revenue. Part II - Expenses: Car & truck expenses (line 9): Vehicle description: 2014 Ford Taurus; placed in service 1/1/2014. Business miles: 14,000. No personal or commuting miles. Vehicle is leased, not owned. Deduction type: Actual expenses Vehicle expenses: Enter the $3,800 automobile expenses as 'Total other actual expenses.' Off-duty hours: Vehicle was available for use during off-duty hours Vehicle was used primarily by 5% owner or related party Another vehicle is available for personal use Evidence does exist to support use of automobile and it is written. Vehicle Depreciation: Leased vehicles do not qualify for depreciation. Instead, the $500 per month lease payments are to be reported on Schedule C as rent expense (line 20). ** ** Note: You need to reduce the annual vehicle lease expense by $8 for what is known as the leased inclusion amount (see page 438 and Example I: 26 of your text). The authors indicate that the amount is $8 (last bullet on page 458). FYI, the correct amount should be $13, but use what the authors have provided. 2 Depreciation (line 13): After you have finished entering the Schedule C expenses (excluding depreciation), you will arrive at the Business Income - Cash Expense Summary screen. Here you can review your previous expense entries or begin entering items to compute depreciation. Choose Depreciation to begin entering the depreciable assets for the business. No assets were acquired prior to 1987, so answer the screen question 'No.' There is no prior year carryover of disallowed Section 179. ACC 175 - FA 15 Case 3 - Comprehensive Problem I: 48 (Chapter 10) (Pages 457 and 458) Click on 'New Copy of Federal Form 4562 Asset Depr. and Vehicle Exp.' to enter the detailed information for each depreciable asset. o Note: Even though you are \"adding a new copy\" of Form 4562 for each asset, only one Form 4562 will be generated. This is because all of the assets relate to the same business activity. o Leased auto: Because the vehicle is being leased (John does not own), it cannot be depreciated. However, the IRS listed property rules require that mileage be reported on Form 4562, Part V, Section B. So, it will be necessary for you to set up the 2014 Ford Taurus in the depreciation worksheet screen. But leave the cost and depreciation method blank. To enter the mileage, click on the folder to the right of the line that reads \"Click the folder to enter business use percent or auto expense data the mileage.\" o Pre-2014 Assets: For each depreciable asset placed in service before 2014 (Old Store Building - 4/1/99; Equipment - 1/10/08) enter: o Asset description, date placed in service, type of property, depreciation method, life, convention, and current depreciation will automatically be computed. You do not need to enter the prior depreciation (except for the equipment sold - see below). o Sale of Equipment: The equipment purchased 1/10/09 was sold on June 30, 2014, so you must enter three additional pieces of information: date of sale, sales price, and prior depreciation. These are necessary in order for the system to compute the gain on sale, which is reported on Form 4797. The system will take care of all computations for you. The equipment was not sold on the installment basis. o New Equipment purchased 3/1/2014 (from the purchase of competitor's store): o Note that this equipment has a 5 year life. 3 ACC 175 - FA 15 Case 3 - Comprehensive Problem I: 48 (Chapter 10) (Pages 457 and 458) o Directly below the Convention Type is where you will elect the Section 179 amount (see page 428 in your textbook). o Special 50% Bonus Depreciation Allowance: The taxpayer is electing NOT to claim this - check the appropriate box. o Buildings: Both the Old Store and the New Store are nonresidential real property, so the life is 39 years. o Part III - Cost of Goods Sold: o o o Line 33 - Cost method is used to value inventory. Line 34 - There was no change in valuing ending inventory. Line 35 - Inventory at beginning of year - provided in problem. Line 36 - Purchases: There were two (2) - the inventory acquired with the purchase of the new store in March, and another in August. o Line 41 - Inventory at end of year: Brite-On uses the FIFO method (FIN ACC 101) to track inventory. You may recall that the basic inventory formula can be used to compute the ending inventory: End. Inventory = Beg. Inventory + Purchases - Cost of Goods* *Use FIFO (first-in, first-out) to compute the CGS When you have completed the return: 1. From the Print menu at the top of the screen, choose the Custom Print Option. 2. Check the following Forms and Schedules boxes: Federal Form 1040, 1040A, 1040EZ Federal Schedule A Federal Schedule C Federal Schedule SE Federal Form 4562 Federal Form 4797 Federal Form 4797, page 2 3. Check the following Documents and Worksheets boxes: Each Federal Form 4562 Asset Depr. and Vehicle Exp. All other Federal Form 4562 boxes 4. After making sure that you have checked all required boxes, click the Print button at the bottom of the Print Center. 4 ACC 175 - FA 15 Case 3 - Comprehensive Problem I: 48 (Chapter 10) (Pages 457 and 458) 5. You should now be at the Print Custom Forms screen. Select the radio button \"Send Output to PDF.\" Select where you want to save the file (change the default location by choosing \"Browse\"). You can save it to your desktop or any other location of your choice. 6. Upload your file through the Blackboard link provided for this assignment. 5