Please read the entire problem for Sherry Hopson on page 7-35. Notice we are only completing a Schedule C and Form 4562 for Ms. Hopson. You do not need to complete the entire form 1040.

Notice that Ms. Hopson has employees and inventory. She values her inventory at cost. Ms. Hopson drove her truck 5,000 miles and all were for business. The truck is not "listed" property, because it's used 100% for business and is over 6000 lbs. From the information given, use the most beneficial method (standard mileage or actual) to determine the deduction for the truck.

Ms Hopson should have $129,994 of income on Sch C line 31.

Sherry Hopson owns a retail family clothing store. Her store is located at 4321 Heather Drive, Henderson, NV 89002. Her employer identification number is 95-1234321 and her Social Security number is 123-45-6789. Sherry keeps her books on an accrual basis. The income and expenses for the year are:

On June 1 of this year, Sherry purchased the following new assets for the store:

	Depreciable Basis	Recovery Period
Heavy-duty truck	$31,000	5 years
Desk and file cabinets	17,000	7 years
Computer	3,000	5 years

The truck is not considered a passenger automobile for purposes of the luxury automobile limitations.

Required: The business has MACRS depreciation of $3,651 on assets placed in service prior to 2016. Sherry uses bonus depreciation but does not make the election to expense, complete her 2016 Schedule C and Form 4562. Make realistic assumptions about any missing data.

Gross sales $351,700 4,000 Returns and allowances enses: Beginning inventory (at cost) Add: purchases Cost of goods available for sale Less: ending inventory (at cost) Cost of goods sold Rent Insurance $84,300 100,700 185,000 75,000 Legal and accounting fees Payroll Payroll taxes Utilities Office supplies Advertising $110,000 23,800 1,500 2,800 37,200 3,440 1,850 750 2,100 Gross sales $351,700 4,000 Returns and allowances enses: Beginning inventory (at cost) Add: purchases Cost of goods available for sale Less: ending inventory (at cost) Cost of goods sold Rent Insurance $84,300 100,700 185,000 75,000 Legal and accounting fees Payroll Payroll taxes Utilities Office supplies Advertising $110,000 23,800 1,500 2,800 37,200 3,440 1,850 750 2,100