Tax Return Problem
Tax Acknowledgment Problem
Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security cardinal is 111-11-1112. Devon does not appetite $3 to go to the Presidential Acclamation Campaign Fund.
Devon's wife, Ariane, anesthetized abroad in 2012. Devon's son, Tom, who is age 16, resides with Devon. Tom's Social Security cardinal is 123-45-6788.
Devon owns a sole cartel for which he uses the accretion adjustment of accounting and maintains no inventory. His revenues and costs for 2016 are as follows:
Sales revenue$740,000Cost of appurtenances awash (based on purchases for the year)405,000Salary expense88,000Rent expense30,000Utilities8,000Telephone6,500Advertising4,000Bad debts5,000Depreciation21,000Health insurance26,000Accounting and acknowledged fees7,000Supplies1,000
Health Insurance-$8,000 for Devon and $18,000 for the employess; Devon accept the actual amount acclamation of $21,000 of Office Equipment.
Other assets accustomed by Devon includes the following:
Dividend assets (qualified dividends): Swan, Inc.$10,000 Wren, Inc.2,000Interest income: First National Bank11,000 Second City Bank2,500 County of Santa Fe, NM bonds17,000
During the year, Devon and his sole cartel had the afterward acreage transactions:
Sold Blue, Inc. banal for $45,000 on March 12, 2016. He had purchased the banal on September 5, 2013, for $50,000.
Received an bequest of $300,000 from his uncle, Henry. Devon acclimated $200,000 to acquirement Green, Inc. banal on May 15, 2016, and invested $100,000 in Gold, Inc. banal on May 30, 2016.
Received Orange, Inc. banal account $9,500 as a allowance from his aunt, Jane, on June 17, 2016. Her adapted base for the banal was $5,000. No allowance taxes were paid on the transfer. Jane had purchased the banal on April 1, 2010. Devon awash the banal on July 1, 2016, for $22,000.
On July 15, 2016, Devon awash one-half of the Green, Inc. banal for $40,000.
Devon was notified on August 1, 2016, that Yellow, Inc. banal he purchased from a aide on September 1, 2015, for $52,500 had become worthless. While he perceived that the advance was risky, he did not ahead that the association would acknowledge bankruptcy.
On August 15, 2016, Devon accustomed a bindle of acreage in Phoenix account $220,000 in barter for a bindle of acreage he endemic in Tucson. Because the Tucson bindle was account $245,000, he additionally accustomed $25,000 cash. Devon's adapted base for the Tucson bindle was $210,000. He originally purchased it on September 18, 2013.
On December 1, 2016, Devon awash the abode in which he had been active for the accomplished 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and confused into a busy townhouse. The sales amount was $480,000, affairs costs were $28,500, and adjustment costs accompanying to the auction were $9,400. Devon purchased the abode for $180,000.
Devon's abeyant itemized deductions, absolute of the above information, are as follows:
Medical costs (before the 10% floor)$ 9,500Property taxes on residence5,800State assets taxes4,000Charitable contributions10,000Mortgage absorption on abode (First National Bank)9,900Sales taxes paid5,000
During the year, Devon makes estimated Federal assets tax payments of $40,000.
Compute Devon's everyman net tax payable or acquittance due for 2016 bold that he makes any accessible elections that will abate the tax. You will charge Forms 1040, 4562, 8824, and 8949 and Schedules A, B, C, D, and SE. Also attach explanations of all the items in this problem. The account should accommodate why anniversary account is taxable, non taxable, deductible or not deductible. Make explanations abundant and armpit cipher sections as appropriate. Lastly, compute the tax accountability with explanations beneath Tax Reform bold the acknowledgment is filed for the 2018 tax year including appliance of IRC Section 199A.
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