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1. Comprehensive Problem 8-1

   Trish Himple 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. Trish keeps her books on an accrual basis. The income and expenses for the year are:

   Gross sales $340,000 Returns and allowances 14,000 Expenses: Beginning inventory (at cost) $ 85,000 Add: purchases 101,000 Cost of goods available for sale $186,000 Less: ending inventory (at cost) 71,000 Cost of goods sold $115,000 Rent 24,400 Insurance 2,000 Legal and accounting fees 5,000 Payroll 56,400 Payroll taxes 4,400 Utilities 2,200 Office supplies 750 Advertising 6,200

   Trish's bookkeeper has provided the book-basis fixed asset roll forward to be used in computing the depreciation (see separate tab). For tax purposes, Trish elected out of bonus depreciation in all years except 2020. She did not elect immediate expensing in any year. The tax lives of the assets are the same as the book lives shown in the fixed asset schedule. The truck is not considered a passenger automobile for purposes of the luxury automobile limitations.

   Trish also has a qualified home office of 250 sq. ft. Her home is 2,000 sq. ft. Her 2015 purchase price and basis in the home, not including land, is $100,000 (the home's market value is $150,000). She incurred the following costs in 2020 related to the entire home:

   Utilities $3,000 Cleaning 1,000 Insurance 1,100 Property taxes 2,000

   Required: Complete Trish's Schedule C, Form 8829, and Form 4562 (as necessary).

   • Make realistic assumptions about any missing data.
   • Enter all amounts as positive numbers.
   • If an amount box does not require an entry or the answer is zero, enter "0".
   • If required round any dollar amount to the nearest dollar.

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