Pedro Rodrguez Cruz and Mnica Santiago Del Valle are married under the community property regime and file their income tax return as married filing jointly. Pedro's date of birth is January 1, 1950 and Monica's is February 1, 1955. The couple's address is Urb. Bella Vista, Calle Monte #1, San Juan, PR 00910. Both are citizens of the United States. United States of America, residents of Puerto Rico, have not generated income outside of Puerto Rico, and are not military.

During taxable year 2021, they carried out the following activities.

Pedro Rodriguez, dba, Medical Equipment & Supplies

Pedro, merchant (Salesperson-retail), owns a business on his own (sole proprietorship), Medical Equipment & Supplies dedicated to the sale and distribution of medical equipment. The business is located in San Juan. Pedro began operations on January 2, 2012 and works there about 40 hours a week. The result of its operations, under the accrual method and on a tax basis, during 2021 was as follows:

Sales $295,000 (not reported in 480s)

Cost of goods sold 170,0001

Rent expense 24,000

Professional services 16,000

Another 10,000

The business meets all the requirements to claim all of its expenses for purposes of the regular tax and the alternate basic tax. Submitted the Agreed-Upon Procedures (AUP).

1. Requirements: Calculate

a. the net income (loss) of Medical Equipment & Supply.

b. Sugar Bakery's net income (loss).

c. the deduction for depreciation for the property used in the rental activity.

d. the net income (loss) from the rental activity.

and. adjusted gross income for marriage in 2021.

F. the net income subject to tax for the marriage in 2021.

g. the normal tax, the preferential rate tax and the total income tax.

h. the income tax payable or the refund to be received.