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The Hicks have provided you some additional information pertaining to a construction business Pete

started. This business, MountainCloud, Inc. (MCI), is a sole proprietorship with Pete being the sole

owner. MCI is located at 123 Elbert Drive, Colorado Springs, CO 80001 (EIN 20-061592).

Pete reported the following information for MCIs business activities (MCI uses the cash method of

accounting):

Income

Credit card receipts $843,000

Cash receipts 771,000

Dividend income 7,200

Municipal bond interest income 2,500

Expenses:

Advertising $7,240

Insurance (for Sept. 1, 2022 Dec. 31, 2023) 22,000

Office building rent (for Jan. 1, 2022 Dec. 31, 2023) 63,400

Equipment leases (for Jan. 1, 2022 Dec. 31, 2023) 7,050

Travel 14,400

Meals for employees, purchased from the grocery store 4,000

Fee for box at Oregon Duck games 8,000

Employee salaries 576,980

Taxes and licenses 38,225

Contributions to Sen. Roberts campaign 14,000

Employee health insurance 47,900

Employee benefit programs 15,500

Utilities 39,725

Office supplies 17,650

Legal and professional fees 14,670

Repairs and maintenance 9,375

Interest expense

(used to purchase corporate bonds, adjusted taxable inc = $10,000) 3,230

In March, Pete took a trip to Utah to attend a construction-related seminar. He spent 4 days attending

the seminar and 3 days visiting and hiking with his brother. He had the following expenses, which are

not included in the above travel expense.

Airfare $ 775

Hotel ($200 per night) $1400

Meals ($30 per day) $ 210

Pete owns a 2015 Jeep Cherokee. He started to use the Jeep for his business on January 1, 2016. He

drove 2,200 business miles during 2022 (he has documentation to verify) and spent $475 on parking

fees. He drove the vehicle for a total of 10,000 miles during the year (7,800 personal miles). He also has

access to another vehicle that he can use for personal purposes.

MCI had the following fixed assets in service:

Item Life of asset Date Purchased Amount

Computer equipment 5 years 10/31/2020 $530,000

Copier 5 years 02/03/2021 $11,550

Vending Machine 7 years 08/17/2021 17,000

Packaging Equipment 7 years 9/22/2021 565,000

Computers 5 years 03/31/2022 385,000

Office desks 7 years 10/15/2022 880,000

Warehouse (new build) 39 years 5/12/1994 1,540,000

MCI would like to take advantage of 179 expensing, but elects out of bonus depreciation, for purchases

in 2022. The company has not taken either of these additional depreciation options in prior years.

MCI listed some equipment for sale. The computer equipment, purchased on 10/31/2020, sold on

03/15/2022 for $421,000. They also sold the packaging equipment, purchased on 9/22/2021, on 12/15/2022 for $462,000.

Create forms Schedule C, Schedule D, Form 4562, and Form 4797.

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