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Just need help completing this problem do not have to give answers just give directions?

Bernard M. Palmer, age 50 (birth date 06/17/1956), is single and lives at XXXX XXXXXXXXXX XXXX, Overland Park, KS 66204. 1. Bernard is a licensed hairstylist and beautician and operates his own business. Located al 1500 Cottonwood Lane, Kansas City, KS 66102, the business is conducted under the name "Bernard's Creations." Besides a display room and a reception area, the business consists of eight work stations (i.e., chairs). During the course of any year, Bernard leases up to seven of the stations to other hairstylists and beauticians. As is the common practice with similar businesses in the area, the other stylists are treated as being self- employed. They arrange their own work schedules, handle their customer appointments, and collect and keep any fees charged. In return for the use of the work station, each stylist pays Bernard a minimum rental plus a percentage of the income earned. Although not expressly provided for, it is expected that the stylists will buy their beautician supplies from Bernard. 2. Bernard's Creations is the local distributor for several beauty products (e.g., conditioners, shampoos) that cannot be purchased in stores. Bernard buys these items from the manufacturers and resells them to other beauticians (including those who rent chairs from him), regular patrons, and walk-in customers. Bernard's Creations is also well known for the selection and quality of its hairpieces (i.e., wigs, toupees). At the business location, Bernard maintains storage facilities and a display area for the items he has for sale. 3. Although Bernard operates his business on a cash basis, he maintains inventory accounts for the items he sells. Relevant information about the inventories (based on lower of cost or market) is as follows: 12/31/05 12/31/06 Beautician supplies Hairpieces and wigs $10,200 13,100 $ 9,900 12,700 4. Bernard's Creations had the following receipts for calendar year 2006: Sales of beauty products $54,000 Sales of hairpieces and wigs 88,000 Income from Bernard's customers (including tips) 50,500 Rents received from stylists for lease of stations 62,000 The amounts shown for sales exclude appropriate state and local sales tax. E-2 Appendix E Comprehensive Tax Return Problems http://www.thomsonedu.com/taxation/wft Bernard's Creations had the following expenses for 2006: Purchases of beauty products Purchases of hairpieces and wigs Operating supplies (e.g., rinses, dyes, styling gels, hair spray) Utilities (i.e., gas, electric, telephone) Water, sewage, trash pickup City fine Legal advice Occupation license for city and state Accounting services Janitorial services Liability insurance Fire and theft insurance Ad valorem property taxes on business assets (equipment, inventory, building) Reception room provisions (magazines, coffee, tea) Advertising (in suburban newspapers) Reception room renovation $34,300 47,500 5,100 8,200 3,800 300 100 2,200 4,600 3,400 3,700 4,400 6,000 2,100 4,300 9,200 6. As Bernard has an aversion to the time and trouble involved, he does everything possible to avoid employer-employee arrangements. Thus, he retains local accounting and janitorial firms to perform the bookkeeping and cleaning work for the business. 7. The ad valorem property taxes listed above do not include a special assessment made in 2006. The city decided to repave Cottonwood Lane, and Bernard's share (based on the frontage of the property) was $3,700. He paid this amount in June. 8. Bernard decided to completely renovate the reception room. On May 1, 2006, he spent 39,200 for chairs, sofa, lamps, coffee bar, etc. The old furnishings were either thrown away or given to customers. Bernard has always followed a policy of claiming as much depreciation as soon as possible. For tax purposes, the old furnishings had a zero basis. 9. On January 10, 1983, Bernard occupied the building he had constructed at Cottonwood Lane. Original cost was $220,000, with $40,000 allocated to the land and $20,000 to special-purpose fixtures (e.g., extra sinks, electrical outlets). Except for a significant down payment (from savings and an inheritance), the cost was financed by a 30-year mortgage. In January 2006, Bernard decided to pay off the mortgage. To do so, he incurred a prepayment penalty of $4,800. 10. The $300 fine levied by the city was attributable to the improper disposal of certain waste chemicals. Although Bernard questioned the justification for the fine as the sanitation department guidelines were vague, he was not inclined to spend time and money contesting die matter. He did, however, pay a customer who is an attorney $100 for advice on the matter. 11. In June 2006, Bernard saw an ad in a trade publication that caught his attention. The owner of several wig shops in Missouri had died, and his e

Public Comments

1. Well, that is quite the copy-paste job you have going there. To start with, Bernard is 53 if he was born in 1956.