Question
Carlos(Age 42) and Maria Gomez (Age 38) live in Lubbock, Texas.They file married/joint.The Gomezes have two children: Luis (age 14) and Amanda (age 12).Both children
Carlos(Age 42) and Maria Gomez (Age 38) live in Lubbock, Texas.They file married/joint.The Gomezes have two children: Luis (age 14) and Amanda (age 12).Both children qualify as federal income tax dependents of Carlos and Maria.Carlos reported the following information for GPE's business activities (GPE uses the cash method of accounting):
Revenues:
Credit card receipts$352,000
Cash receipts 648,000
Total revenue$1,000,000
Expenses:
Advertising$5,450
Insurance-professional 15,750
Office building rent 62,000
Equipment leases6,050
Travel 14,200
Meals and entertainment2,980
Wages498,725
Social Security and Medicare taxes for employees44,875
Employee health insurance 42,000
Employee benefit programs 14,500
Utilities 37,425
Office supplies 18,900
Legal and professional fees 15,550
Start-up expenses (incurred in January 2018)15,000
Repairs and maintenance 10,000
Total Expenses
GPE purchased and placed in service the following fixed assets in 2018:
Item
Date Purchased
Amount
Laptop computers
March 1
$20,580
Printers
June 1
$6,580
Office furniture
October 18
$19,800
GPE wants to claim Section 179 depreciation on the laptop computer and printer.He wants to claim MACRS on the office furniture.He does not claim bonus depreciation on any of the assets.
Carlos worked part-time on GPE business activities until he finished his employment with WTE early in the year.Carlos worked full-time on GPE business activities for the rest of the year.
GPE filed Forms 1099 for payments made to contractors when required to do so. His business is not a specified service business for purposes of the Qualified Business Income Deduction.
Carlos and Maria paid $22,808 for health insurance for his family (for the time he was working at GPE).This amount is not included in the GPE expenses listed above.Neither Carlos nor Maria had access to employer-provided health insurance during the year while they were paying the premiums for this policy.The entire Gomez family was covered by minimum essential health insurance during each month in 2018.
In addition, Carlos has established a traditional IRA.He contributed $5500 to his IRA.Maria also contributed $5500 to her IRA.He is was not covered by a retirement plan at work.
Maria received the following Form 1099-MISC from her bookkeeping activities for her largest client
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