Jack, a geologist, had been debating for years whether or not toventure out on his own and operate his own business. He haddeveloped a lot of solid relationships with clients and he believedthat many of them would follow him if he were to leave his currentemployer. As part of a New Year’s resolution, Jack decided he wouldfinally do it. Jack put his business plan together and, on January1 of this year, Jack opened his doors for business as a Ccorporation called Geo-Jack (GJ). Jack is the sole shareholder.Jack reported the following financial information for the year(assume GJ reports on a calendar year and uses the accrual methodof accounting). In January, GJ rented a small business office about12 miles from Jack’s home. GJ paid $13,900, which represented adamage deposit of $5,560 and rent for two years ($4,170 annually).GJ earned and collected $355,000 performing geological-relatedservices and selling its specialized digging tool. GJ received $60interest from municipal bonds and $2,230 interest from otherinvestments. GJ purchased some new equipment in February for$49,000. It claimed depreciation on these assets during the year inthe amount of $7,515. GJ paid $7,650 to buy luxury season ticketsfor Jack’s parents for State U football games. GJ paid Jack’sfather $12,600 for services that would have cost no more than$7,560 if Jack had hired any other local business to perform theservices. While Jack’s dad was competent, he does not command sucha premium from his other clients. In an attempt to get his name andnew business recognized, GJ paid $7,650 for a one-page ad in theGeologic Survey. It also paid $16,300 in radio ads to be runthrough the end of December. GJ leased additional office space in abuilding downtown. GJ paid rent of $30,250 for the year. InNovember, Jack’s office was broken into and equipment valued at$5,650 was stolen. The tax basis of the equipment was $6,150. Jackreceived $2,260 of insurance proceeds from the theft. GJ incurred a$4,325 fine from the state government for digging in anunauthorized digging zone. GJ contributed $3,260 to lobbyists fortheir help in persuading the state government to authorize certainunauthorized digging zones. On July 1, GJ paid $1,800 for an18-month insurance policy for its business equipment. The policycovers the period July 1 of this year through December 31 of nextyear. GJ borrowed $20,000 to help with the company’s initialfunding needs. GJ used $2,000 of funds to invest in municipalbonds. At the end of the year, GJ paid the $1,200 of interestexpense that accrued on the loan during the year. Jack lives 12miles from the office. He carefully tracked his mileage and drovehis truck 6,280 miles between the office and his home. He alsodrove an additional 7,200 miles between the office and traveling toclient sites. Jack did not use the truck for any other purposes. Hedid not keep track of the specific expenses associated with thetruck. However, while traveling to a client site, Jack received a$215 speeding ticket. GJ reimbursed Jack for business mileage andfor the speeding ticket. GJ purchased two season tickets (20 games)to attend State U baseball games for a total of $1,360. Jack tookexisting and prospective clients to the games to maintain contactand find further work. This was very successful for Jack as GJgained many new projects through substantial discussions with theclients following the games. GJ reimbursed employee-salespersons$3,760 for meals involving substantial business discussion. GJ hada client who needed Jack to perform work in Florida. Because Jackhad never been to Florida before, he booked an extra day and nightfor sightseeing. Jack spent $530 for airfare and booked a hotel forthree nights ($185/night). (Jack stayed two days for businesspurposes and one day for personal purposes.) He also rented a carfor $110 per day. The client arranged for Jack’s meals while Jackwas doing business. GJ reimbursed Jack for all expenses. GJ paid atotal of $23,000 of wages to employees during the year and cost ofgoods sold was $28,000. Required: a. What amount will increasetaxable income (positive) or reduce taxable income (negative) foreach of the above scenarios? b. As a C corporation, does GJ have arequired tax year? If so, what would it be? c. If GJ were a soleproprietorship, would it have a required tax year-end? If so, whatwould it be? d. If GJ were an S corporation, would it have arequired tax year-end? If so, what would it be?