58. LO.2, 3, 4, 5 Lynn, age 45, is single and has no dependents. Her income and expenses for 2013 are as follows:

Income—

Salary $33,000 Taxable interest on corporate bonds 1,800 Dividend income 1,900 Business income 64,000 Expenditures—

Medical expenses 12,000 State income taxes 6,000 Real estate taxes 8,500 Mortgage (qualified housing) interest 9,200 Investment interest 5,500 Cash contributions to various charities 2,900 The $64,000 business income is from Apex Office Supplies Company, a sole proprietorship that Lynn owns and operates. Apex claimed MACRS depreciation of $3,175 on real and personal property used in the business. ADS depreciation on the property would have been $2,500. Lynn received interest of $30,000 on City of Pensacola private activity bonds that were issued in 2011.

Based on the financial information presented above, compute Lynn’s AMT for 2013.

a. On January 16, 2012, Robert sold 1,000 shares of stock for a gain of $10,000. The stock was acquired 14 months ago.

b. He received $30,000 of interest on private activity bonds that he had purchased in 2008. He also received $40,000 of interest on tax-exempt bonds that are not private activity bonds.

c. He received gross rent income of $190,000 from an apartment complex he owns. He qualifies as an active participant.

d. Expenses related to the apartment complex, which he acquired in 1987, were $225,000.

e. Robert’s interest income (on CDs) totaled $23,000. Because he invests only in growth stocks, he has no dividend income.

f. He won $60,000 on the lottery.
g. On October 9, 2010, Robert exercised his rights under Falcon Corporation’s incentive stock option plan. For an option price of $20,000, he acquired stock worth $75,000. The stock became freely transferable in 2012. At the date the stock became freely transferable, the fair market value was $95,000.
h. Robert was the beneficiary of an $800,000 life insurance policy on his Uncle Jake.
He received the proceeds in October.
i. Robert had the following potential itemized deductions from AGI:
• $5,200 fair market value of stock contributed to Presbyterian Church (basis of stock was $3,000). He had owned the stock for two years.
• $4,200 interest on consumer purchases.
• $3,900 state and local income tax.
• $6,500 medical expenses (before 7.5% floor) for himself. He also paid $15,000 of medical expenses for a parishioner who died.
• $300 for a safe deposit box that is used to store investments and related legal documents.
• $5,000 paid for lottery tickets associated with playing the state lottery. Robert contributed $5,000 of his winnings to the church.
• $5,000 contribution to his traditional IRA.
• Because Robert lived in Montana, he had no sales tax.
• $750 contribution to the campaign of the Democratic candidate for governor.
j. Robert made estimated tax payments of $27,500.
Use Forms 1040 and 6251 and Schedules A, B, D, and E to compute the tax liability (including AMT) for Robert A. Kliesh for 2012. Suggested software: H&R BLOCK At Home.