A friend convinced the owner of a vacant store to allow him use of the store for a one-year period for $12,000, to be payable in monthly installments of $1,000. This amount was significantly below its fair rental value. Their agreement was not reduced to writing. Near the end of the year, the friend and the owner discussed an extension of the arrangement, but did not arrive at an agreement. The owner informed the friend that, if the friend remained, the rent would be raised to its market value. The friend objected. After the end of the one-year period, the friend remained in the store. The friend sent the owner a $1,000 rent check. The owner returned it to the friend, indicating that the rent was now the fair rental value of the premises. Is the owner correct that the friend is obligated to pay the fair rental value of the premises?

James jones is the owner of a small retail business operated as a sole proprietorship. during 2017, his business recorded the following items of income and expense: revenue from inventory sales $ 147,000 cost of goods sold 33,500 business license tax 2,400 rent on retail space 42,000 supplies 15,000 wages paid to employees 22,000 payroll taxes 1,700 utilities 3,600 compute taxable income attributable to the sole proprietorship by completing schedule c to be included in james’s 2017 form 1040. compute self-employment tax payable on the earnings of james’s sole proprietorship by completing a 2017 schedule se, form 1040. assume your answers to parts a and b are the same for 2018. further assume that james's business is not a service business, and that it has $155,000 unadjusted basis in tangible depreciable property. calculate james's 2018 section 199a deduction.