Tax Accounting Problem

John Stantus, single, is the sole owner of Stantus Accounting Services, Co. He started the company, which is organized as a Sole Proprietorship, on February 10 odf the current year. For this year, Stantus Accounting Services, reported the following amounts of income and expenses.

Fee Revenues: $840,000

Expenses:

Employee Wages: (125,000)

Payroll Taxes: (9,563)

Advertising: (3,600)

Insurance: (2,400)

Utilities: (7,200)

Rent: (10,000)

Supplies: (5,000)

Selling Expenses: (35,000)

- John purchased a car on February 1 of the current year for $24,000. He uses the car for both business and personal purposes. Milage logs indicate that John put 40,000 miles on the car this year. Of that total, 28,000 miles were business related and the remaining 12,000 were related to personal travel. JOhn wants to deduct the maximum amount allowable for business use of his car.

-John also purchased offive equipment, computers and other five-year property for use in the business. He purchased $625,000 worth of such depreciable assets in March. He wants to deduct the maximum amount allowable under Code Sec. 179 and depreciate theremaining cost (if any) using bonus and MACRS depreciation.

- Selling expenses include $6,000 spent for meals and entertainment uncurred on John's sales calls during the year.

- Selling expenses also include $12,000 in illegal payments to city officials paid to secure a lucrative contract with the city. John was uncomfortable making ths payment, but reasoned that the contract was important to get his business off to a good start.

-Selling expenses also include gasoline, partking fees, and other documents auto expenses totaling $2,500 attributable to John's sales calls.

Assume that John report the revenue and expenses of Stantus Accounting Services on Schedule C, that he uses the cash methof of accounting, and that he has no other taxable income, deductions or credits other than the items listed above. As noted above, he is single, with no dependents. He lives at 105 1st Street in Jackson, Mississippi (zip code : 39201. Skipping schedule SE (on which you would ordinarily calculate the self-employment tax), prepare John's 2017 Individual Income Tax Return. (Use forms for 2017)

You will need to fill out Form 1040, Schedule C, and Form 4562 for tax year 2017 for this assignment. Do not calculate self-employment tax.