Armando Z. and Lourdes K. Gonzales are married and file a joint return. Armando is self-employed as a dentist, and Lourdes is a college professor. Armando and Lourdes have three children. The oldest is Ricardo, who lives at home. Ricardo is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Armando and Lourdes provided $6,000 toward Ricardo's support (including $4,000 for Ricardo's fall tuition). They also provided over half the support of their daughter, Selena, who is a full-time student at Edgecliff College in Cincinnati. Selena worked part-time as an independent contractor during the year, earning $3,200. Selena lived at home until she was married in December 2015. She filed a joint return with her husband, Tony, who earned $20,000 during the year. Felipe is the youngest and lived in the Gonzales's home for the entire year. The Gonzaleses provide you with the following additional information:

Armando and Lourdes would like to take advantage on their return of any educational expenses paid for their children.

The Gonzaleses do not want to contribute to the presidential election campaign.

The Gonzaleses live at 621 Franklin Avenue, Cincinnati, Ohio 45211.

Armando's birthday is 3/5/1957 and his Social Security number is 333-45-6666.

Lourdes's birthday is 4/24/1960 and her Social Security number is 566-77-8888.

Ricardo's birthday is 11/6/1992 and his Social Security number is 576-18-7928.

Selena's birthday is 2/1/1996 and her Social Security number is 575-92-4321.

Felipe's birthday is 12/12/2003 and his Social Security number is 613-97-8465.

The Gonzaleses do not have any foreign bank accounts or trusts.

Lourdes is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, state income tax of $900, Cincinnati city income tax of $375, $1,860 of Social Security tax, and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $620, and Medicare tax of $145.

The Gonzaleses received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $1,100 on the loan. Armando received a dividend of $540 on General Bicycle Corporation stock he owns. Lourdes received a dividend of $390 on Acme Clothing Corporation stock she owns. Armando and Lourdes received a dividend of $865 on the jointly owned stock in Maple Company. All of the dividends received in 2015 are qualified dividends.

Armando practices under the name “Armando Z. Gonzales, DDS.” His business is located at 645 West Avenue, Cincinnati, Ohio 45211, and his employer identification number is 01-2222222. Armando’s gross receipts during the year were $111,000. Armando uses the cash method of accounting for his business. Armando’s business expenses are as follows:

Advertising	$ 1,200
Professional dues	490
Professional journals	360
Contributions to employee benefit plans	2,000
Malpractice insurance	3,200
Fine for overbilling State of Ohio for work performed on welfare patient	5,000
Insurance on office contents	720
Interest on money borrowed to refurbish office	600
Accounting services	2,100
Miscellaneous office expense	388
Office rent	12,000
Dental supplies	7,672
Utilities and telephone	3,360
Wages	30,000
Payroll taxes	2,400

In June, Armando decided to refurbish his office. This project was completed and the assets placed in service on July 1. Armando's expenditures included $8,000 for new office furniture, $6,000 for new dental equipment (seven-year recovery period), and $2,000 for a new computer

Lourdes’s mother, Maria, died on July 2, 2010, leaving Lourdes her entire estate. Included in the estate was Maria’s residence (325 Oak Street, Cincinnati, Ohio 45211). Maria’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2010, was $155,000. The property was distributed to Lourdes on January 1, 2011. The Gonzaleses have held the property as rental property and have managed it themselves. From 2011 until June 30, of the current year they rented the house to the same tenant. The tenant was transferred to a branch office in California and moved out at the end of June. Since they did not want to bother finding a new tenant, Armando and Lourdes sold the house on June 30, of the current year. They received $140,000 for the house and land ($15,000 for the land and $125,000 for the house), less a 6 percent commission charged by the broker. They had depreciated the house using the MACRS rules and conventions applicable to residential real estate. To compute depreciation on the house, the Gonzaleses had allocated $15,000 of the property’s basis to the land on which the house is located. The Gonzaleses collected rent of $1,000 a month during the six months the house was occupied during the year. They incurred the following related expenses during this period:

Property insurance	$500
Property taxes	800
Maintenance	465
Depreciation (to be computed)	?

The Gonzaleses sold 200 shares of Capp Corporation stock on September 3, of the current year for $42 a share (minus a $50 commission). The Gonzaleses received the stock from Armando's father on June 25, 1980, as a wedding present. Armando's father originally purchased the stock for $10 per share on January 1, 1967. The stock was valued at $14.50 per share on the date of the gift. No gift tax was paid on the gift.

Lourdes is required by Xavier University to visit several high schools in the Cincinnati area to evaluate Xavier University students who are doing their practice teaching. However, she is not reimbursed for the expenses she incurs in doing this. During the spring semester (January through April 20), she drove her personal automobile 6,800 miles in fulfilling this obligation. Lourdes drove an additional 6,700 personal miles. She has been using the car since June 30, 2014. Lourdes uses the standard mileage method to calculate her car expenses.

Armando and Lourdes have given you a file containing the following receipts for expenditures during the year:

Prescription medicine and drugs (net of insurance reimbursement)	$ 376
Doctor and hospital bills (net of insurance reimbursement)	2,468
Penalty for underpayment of last year's state income tax	15
Real estate taxes on personal residence	4,762
Interest on home mortgage (paid to Home State Savings & Loan)	8,250
Interest on credit cards (consumer purchases)	595
Cash contribution to St. Matthew's church	3,080
Payroll deductions for Lourdes's contributions to the United Way	150
Professional dues (Lourdes)	325
Professional subscriptions (Lourdes)	245
Fee for preparation of prior year tax return paid April 12,of current year	500

The Gonzaleses filed their prior year federal, state, and local returns on April 12 of the current year. They paid the following additional taxes with their prior year returns: federal income taxes of $630, state income taxes of $250, and city income taxes of $75.

The Gonzaleses made timely estimated federal income tax payments of $1,500 each quarter during the current tax year. They also made estimated state income tax payments of $300 each quarter and estimated city income tax payments of $160 each quarter. The Gonzaleses made all fourth-quarter payments on December 31. They would like to receive a refund for any overpayments.

Armando and Lourdes have qualifying insurance for purposes of the Affordable Care Act (ACA).

During the tax year Armando and Lourdes home was broken into. One of Lourdes Diamond broaches was stolen. The fair value of this broach was $15,890. Armando had purchased this broach for Lourdes for the 5 year wedding anniversary a few years back. He paid $12,999 for it then. They received $10,000 of insurance reimbursement from this theft.

Armando and Lourdes both contributed $5,500 to their traditional IRAs during the year and would like to take the maximum deduction for these contributions.

During this year Armando’s great aunt passed away. Armando was the beneficiary of this life insurance policy and receive $100,000 in cash.

Finally, a few years back Lourdes was in a car accident. The children were in the car with her at the time. The accident was not Lourdes fault. Lourdes had to spend a few days in the hospital as a result and complete months of physical therapy. The Gonzales filed a lawsuit against the other vehicle’s driver. The lawsuit ended up in court this year. Lourdes was awarded $200,000 in compensatory damages and $150,000 in punitive damages.  

Fill out Schedule SE- Self Employment taxes and 1040 form using the information provided above.