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 unicorporated specialty electrical lighting retail store, Brite-On. Brite-On had the following asssets on January 1, 2012:

Assets

Old Store building purchased April 1, 1999 (Cost $100,000)

Equipment (7-year recovery) purchased January 10,2007 (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, 2012 for $107,000. The purhcase 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, 2012, 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 1,2012. The car is used 100% for business and was driven 14,0000 miles during the year.

Brite-On sold 8,000 light bulbs in August 2012 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 licesnes ($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 2007: The Brites elected out of bonus depreciation and did not elect Sec.179

Equipment acquired in 2012: The Brites elected Sec.179 to expense the cost of the 5-year equipment ut elected out of bonus depreciation.

Lease inclusion rules require that Brite-On reduce its decutible lease expense by $8 (appendix C, Table 13)

Compute Brites taxable income and balance due or refund for 2012.

Additional Questions:

Brite-On business income for 2012?

Gain/loss on sale of 7-yr equipment?

Total income?

Adjusted gross income?

Total itemized deductions?

Taxable income?

2012 income tax per MFJ rate schedule?

2012 self-employment tax?

Total tax?

Total payments?

Overpayment (refund)?

Brite-On COGS?

Brite-On Depcriation for 2012?

Accumulated depcreciation on 7-yr equipment sold?

Auto lease payment net of inclusion amount?