based on 2023

Question 3 Austin is the sole owner of a small LC, speclalizing in manufacturing hand sanitizer. Austin sends you the following income/expenses items a week ago: - Income from the business: $1 million - Expenses: - Factory: \$300k purchased in September of this year. - Machine: \$150k purchased in July of this year - Employee salary: $300k (1 full-time factory manager =$50k,15 part-time contractors, $10k each, In addition, Austin also hires his dad working as a vice-manager at the factory and pays his dad $100k. Through some research, you know that the average salary for that same position is about $45k ) 300K 50K+(1510=150K)t45K=245K (Salary should match the average employee wage for the position to be deductible) - This year is an extremely profitable year for Austin's business. For that reason, Austin decided to host an employee appreciation year-end party to celebrate. Austin believes that he would need to host quite a "kick-ass" party because his annual pays for the employees are quite low. in addition, a fun and special party would be helpful to boost employee morale. Austin decides to rent out a small yacht for a night of 12/30/2022 and host the company party there. Below is the cost of the party: - Yacht rental =$30k - Food and Drinks served on board at the party =$20k - Utilites: $30k a) Assume there are no depreciation expenses allowed (which also mean no Section 179, and no Bonus depreciation), calculate Andrews AGL. Show details calculation and explanation. AGI=Gross income-adjustments Total income: 1Mal Factory: (300K) Machine: (150K) Salary: (245K) Work party: (30K+20K=50K) Utlities: (30K) AGI=225K b) How would your answer in a) change if we now account for asset depreciation expenses (including 179. Bonus depreclation, and MACRS)? Show detals calculation and explanation. I. c) It seems like Austin is trying to implement some tax strategy in this year. Identify at least 1 strategy that Austin used and explain how it helps (or expected to help) Austin to reduce his tax liability