John and Ellen Brite are married, file a joint return, and are less than 65 years old. They have no dependents, John owns an unincorporated specialty electrical lighting retail store, Brite-On. Brite-On had the following assets on January 1, 2019: Assets Old Store building purchased April 1, 2004 (Cost $100,000) Equipment (7-year recovery) purchased January 10,2014 (Cost $30,000) Inventory valued using FIFO method: 4,000 light bulbs (Cost $5/bulb) Brite-On purchased a competitor's store on March 1, 2019 for $206,000. The purchase price included the following: New Store Building ($115,000 FMV) Land ($28,000 FMV) Equipment (5-year recovery) (Cost $45,000 FMV) Inventory: 3,000 light bulbs ($6/bulb cost) On June 30, 2019, Brite-On sold the 7-year recovery period equipment for $12,000. Brite-On leased a car for $860/month beginning on June 1,2019. The car is used 100% for business and was driven 14,0000 miles during the year. Brite-On sold 8,000 light bulbs at a cost of $15/bulb during the year. Also, Brite-On made additional purchases of 4,000 light bulbs in August 2019 at a cost of 7$/bulb. Brite-On had the following revenues (in addition to the sales of light bulbs) and additional expenses: Service revenue ($94,000) Interest Expense on business loans ($6,000) Auto Expenses (Gas, oil, etc.) ($4,800) Taxes and licenses ($3,300) Utilities ($2,800) Salaries ($36,000) John and Ellen also had some personal expenses: Medical bills $4,500 Real property taxes 3,800$ State income taxes 5,100$ Home mortgage interest $5,000 Charitable contributions (cash) $2,600 Ellen receives $42,000 of wages from employment elsewhere, from which $4,000 of federal income taxes were withheld. John and Ellen made four $3,100 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. The Brites received interest income on a bank savings account of $275. John and Ellen made four $5,000 quarterly estimated tax payments. For self-employment tax purposes, assume John spent 100% of his time at the store while Ellen spends no time at the store. Additional Facts: Equipment acquired in 2014: The Brites elected out of bonus depreciation and did not elect Sec.179 Equipment acquired in 2019: The Brites elected Sec.179 to expense the cost of the 5-year equipment. Assume that the lease inclusion rules require that Brite-On reduce its annual deductible lease by 41$. a) Question: Compute the Brite's taxable income and balance due or refund for 2019. b) The following information is also available: John and Ellen live at 111 Maple Street, Johnsonville, Colorado 81733 Brite-On is located at 3900 Market Street, Johnsonville, Colorado 81733. Its employer identification number is 44-1357924 The business uses the accrual method and did not make any payments that would require Form 1099 to be filed. It has used the cost method to value inventory for many years. John started using his automobile in his business on July 1, 2012. During 2019, it was used 7,000 miles for John's business., 1,800 miles for commuting, and 6,500 miles for other reasons. The automobile and Ellen's automobile were available for personal use and during off-duty hours. John has written evidence to support his deduction for automobile expenses. Question: Complete the Brites' 2019 Form 1040, Schedules 1,2,3,C and SE, and Forms 4562 and 4797.