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:

Gross sales $351,700

Returns and allowances 4,000

Expenses:

Beginning inventory (at cost) $84,300

Add: purchases 100,700

Cost of goods available for sale 185,000

Less: ending inventory (at cost) 75,000

Cost of goods sold $110,000

Rent 23,800

Insurance 1,500

Legal and accounting fees 2,800

Payroll 37,200

Payroll taxes 3,440

Utilities 1,850

Office supplies 750

Advertising 2,100

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 on Pages 7-39 to 7-42. Make realistic assumptions about any missing data.

SCHEDULE C Profit or Loss From Business OMB No. 1545-0074 (Sole P Information about Schedule C and its separate instructions is at www.irs.gov/schedulec. Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. 6 Department of the Treasury Internal Revenue Service (99 Social security number (SSN) A B Enter code from instructions Principal business or profession, including product or service (see instructions) Business name. If no separate business name, leave blank Business address (including suite or room no.) D Employer ID number (EIN), (see instr.) and ZIP code F Accounting method: (1) Cash 2) Accrual (3 Other (specify) G Did you "materially participate th operation of this business during 20162 If "No," see instructions for limit on losses Yes No If you started or acquired this business during 2016, check here - . . I Did you make any payments in 2016 that would require you to file Form(s) 1099? (see instructions). . ....Yes No If "Yes, did you or will you file 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 2 Returns and allowances 3 Subtract line 2 from line 4 Cost of goods sold (from line 42) 5 Gross profit. Subtract line 4 from line 3 . 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 7 Gross income. Add lines 5 and 6 for business use of ome only on line 30 18 Office expense (see instructions) 18 19 Pension and profit-sharing plans 20 Rent or lease (see instructions] 9 Car and truck expenses (see Commissions and fees a Vehicles, machinery, and equipment 20a b 10 11 Contract labor (see instructions)11 Depreciation and section 179 included in Part I) (see Other business property Repairs and maintenance Supplies (not included in Part II) 21 13 22 23 122 Taxes and licenses.. 24 Travel, meals, and entertainment: (other than on line 19) 15 Insurance (other than health)15 16 Interest: entertainment (see instructions) 24b 26 Wages (less employment credits). 26 27a Other expenses (from line 48). 27a a Mortgage(paid to banks, etc.) 16a 17 Legal and professional services 17 28 Total expenses before expenses for business use of home. Add lines 8 through 27a 29 Tentative profit or (loss). Subtract line 28 from line 7 . 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 b Reserved for future use unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Method Worksheet in the instructions to figure the amount to enter on line 30 Net profit or (loss). . If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2 (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. If you have a loss, check the box that describes your investment in this activity (see instructions). . If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. . If you checked 32b Use the 31 Subtract line 30 from line 29. 32 32aAll investment is at risk 32bSome investment is not must attach Form 6198. Your loss For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2016 SCHEDULE C Profit or Loss From Business OMB No. 1545-0074 (Sole P Information about Schedule C and its separate instructions is at www.irs.gov/schedulec. Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. 6 Department of the Treasury Internal Revenue Service (99 Social security number (SSN) A B Enter code from instructions Principal business or profession, including product or service (see instructions) Business name. If no separate business name, leave blank Business address (including suite or room no.) D Employer ID number (EIN), (see instr.) and ZIP code F Accounting method: (1) Cash 2) Accrual (3 Other (specify) G Did you "materially participate th operation of this business during 20162 If "No," see instructions for limit on losses Yes No If you started or acquired this business during 2016, check here - . . I Did you make any payments in 2016 that would require you to file Form(s) 1099? (see instructions). . ....Yes No If "Yes, did you or will you file 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the "Statutory employee" box on that form was checked 2 Returns and allowances 3 Subtract line 2 from line 4 Cost of goods sold (from line 42) 5 Gross profit. Subtract line 4 from line 3 . 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) 7 Gross income. Add lines 5 and 6 for business use of ome only on line 30 18 Office expense (see instructions) 18 19 Pension and profit-sharing plans 20 Rent or lease (see instructions] 9 Car and truck expenses (see Commissions and fees a Vehicles, machinery, and equipment 20a b 10 11 Contract labor (see instructions)11 Depreciation and section 179 included in Part I) (see Other business property Repairs and maintenance Supplies (not included in Part II) 21 13 22 23 122 Taxes and licenses.. 24 Travel, meals, and entertainment: (other than on line 19) 15 Insurance (other than health)15 16 Interest: entertainment (see instructions) 24b 26 Wages (less employment credits). 26 27a Other expenses (from line 48). 27a a Mortgage(paid to banks, etc.) 16a 17 Legal and professional services 17 28 Total expenses before expenses for business use of home. Add lines 8 through 27a 29 Tentative profit or (loss). Subtract line 28 from line 7 . 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 b Reserved for future use unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Method Worksheet in the instructions to figure the amount to enter on line 30 Net profit or (loss). . If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2 (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. If you have a loss, check the box that describes your investment in this activity (see instructions). . If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. . If you checked 32b Use the 31 Subtract line 30 from line 29. 32 32aAll investment is at risk 32bSome investment is not must attach Form 6198. Your loss For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2016