At the beginning of 2017, Donna Harp was employed as a cinematographer by Farah Movie, Inc., a

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At the beginning of 2017, Donna Harp was employed as a cinematographer by Farah Movie, Inc., a motion picture company in Los Angeles, California. In June, she accepted a new job with Ocala Production in Orlando, Florida. Donna is single and her Social Security number is 000-00-1111. She sold her house in California on August 10 for $500,000. She paid a $14,000 sales commission. The house was acquired on March 23, 1990, for $140,000. The cost of transporting her household goods and personal effects from California to Orlando amounted to $2,350. To travel from California to Florida, she paid travel and lodging costs of $370 and $100 for meals.

On July 15, she purchased a house for $270,000 on 1225 Minnie Lane in Orlando. To purchase the house, she incurred a 20-year mortgage for $170,000. To obtain the loan, she paid points of $3,400. The $3,600 of property taxes for the house in Orlando were prorated with $1,950 being apportioned to the seller and $1,650 being apportioned to the buyer. In December of the current year she paid $3,600 for property taxes. Other information related to her return:

Salary from Farah Movie, Inc.

$30,000

Salary from Ocala Production, Inc.

70,000

Federal income taxes withheld by Farah

6,000

Federal income taxes withheld by Ocala

22,000

FICA taxes withheld by Farah

2,295

FICA taxes withheld by Ocala

5,355

Interest income from Sun National Bank

1,800

Dividend income (qualifying dividends)

10,000

Interest paid for mortgage:


Home in California

6,780

Home in Orlando

3,800

Property taxes paid in California

4,100

Sales taxes paid in California and Florida

3,125

State income taxes paid in California

2,900


a. Determine the amount of recognized gain on the sale of the residence.
b. Prepare Forms 3903, 8960, and 1040, including Schedules A, B, and D.

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Federal Taxation 2019 Individuals

ISBN: 9780134739670

32nd Edition

Authors: Timothy J. Rupert, Kenneth E. Anderson

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