At the beginning of 2015, 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, 1988, 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.