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 electrical lighting retail store, Brite-On. Brite-On had the following assets on January 1, 2013: Assets Old Store building purchased April 1, 1999 (Cost $100,000) Equipment (7-year recovery) purchased January 10, 2008 (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, 2013 for $107,000. The purchase price included the following: New Store Building ($60,000 FMV) Land ($18,000 FMV) Equipment (5-year recovery) (Cost $11,000 FMV) Inventory: 3,000 light bulbs ($6/bulb cost) On June 30, 2013, 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, 2013. The car is used 100% for business and was driven 14,000 miles during the year. Brite-On sold 8,000 light bulbs in August 2013 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 ($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 2008: The Brites elected out of bonus depreciation and did not elect Sec.179 Equipment acquired in 2013: 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 (Appendix C, Table 13) Compute Brites taxable income and balance due or refund for 2013.