4. John Smith, age 31, is single and has no dependents. At the beginning of 2020, John started his own excavation business and named it Earth Movers. John lives at 1045 Center Street, Lindon, UT. and his business is located at 381 State Street, Lindon UT. The Zip Code for both addresses is 810-12. John's Social Security number 111-11-1111, and the business identification number is 11-1111111. John is a cash basis taxpayer. During 2020, John reports the following items in connection with his business. Fee income for services rendered $912.000 Building rental expense Office furniture and equipment rental expense Office supplies 36,000 9,000 2,500 Utilities 4,000 Salary for secretary Salary for equipment operators Payroll taxes Fuel and oil for the equipment 34,000 42,000 7,000 21,000 Purchase of three new front-end loaders on January 15, 2020 Purchase of a new dump truck on January 18, 2020 560,000 80,000 During 202o, John recorded the following additional items. Interest income from First National Bank $10,000 Dividends from ExxonMobil Quarterly estimated tax payments 9,500 11,500 John wants to maximize his cost recovery deductions (including taking any 179 expense and any available additional first-year depreciation) On October 8, 2020, John inherited IBM stock from his Aunt Mildred. John had been her favorite nephew. According to the data provided by the executor of Aunt Mildred's estate, the stock was valued for estate tax purposes at $110,000. John is considering selling the IBM stock for $125,000 on December 29, 2020, and using $75,000 of the proceeds to purchase an Acura ZDX. He would use the car 100% for business, John wants to know what effect these transactions would have on his 2020 adjusted gross income. Write a letter to John in which you present your calculations. Ignore any Federal self-employment tax implications.