Comprehensive Problem 3-2A

Russell (birthdate February 2, 1966) and Linda (birthdate August 30, 1971) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landscapes Unlimited. The business is operated out of their home, located at 1234 Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russells bookkeeper provided the following income statement from the landscaping business:

Lawns and Landscapes Income Statement 12/31/2017
	Current Period			Prior Period
	1/1/2017 to 12/31/2017			1/1/2016 to 12/31/2016
REVENUES
Lawn maintenance	$82,345.00			$71,998.00
Lawn and plant installation	34,568.00			48,576.00
Other	17,097.00			8,001.00
TOTAL REVENUES	134,010.00			128,575.00
COST OF SERVICES
Salaries	83,412.00			78,445.00
Payroll Taxes	6,673.00			6,432.00
Equipment Rental	12,600.00			10,651.00
Maintenance (Equipment)	8,316.00			8,435.00
Special Clothing and Safety Shoes	660.00			200.00
Contract Labor	7,780.00			6,790.00
TOTAL COST OF SERVICES	119,441.00			110,953.00
GROSS PROFIT (LOSS)	14,569.00			17,622.00
OPERATING EXPENSES
Advertising and Promotion	1,500.00			700.00
Donations	600.00			500.00
Insurance	4,000.00			870.00
Meals and Entertainment	2,300.00			2,100.00
Subscriptions	120.00			120.00
Business Gifts	790.00			600.00
Telephone	2,015.00			1,956.00
Training	1,975.00
Travel	865.00			750.00
Other	1,780.00			2,724.00
TOTAL OPERATING EXPENSES	15,945.00			10,320.00
NET INCOME (LOSS)	$(1,376.00)			$7,302.00

The bookkeeper provided the following additional information:

Donations expense is a $600 donation to the Campaign to Re-Elect Senator Ami Dahla.

Training includes $575 for an educational seminar on bug control. It also includes the cost for Russell to attend an online certificate program in landscaping in order to improve his skills and advertise his designation as a certified landscaper. The tuition, fees, and books cost $1,400. He also drove his personal car 29 miles each way to Boise to take exams three times for a total of 174 miles.

No business gift exceeded $22 in value.

The business uses the cash method of accounting and has no accounts receivable or inventory held for resale.

In addition to the above expenses, the Longs have set aside one room of their house as a home office. The room is 200 square feet and their house has a total of 1,600 square feet. They pay $12,600 per year rental on their house, and the utilities amount to $3,000 for the year.

The Longs also have the following interest income for the year from corporate bonds:

Interest from Idaho Bank and Trust bond portfolio

$42,810

The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively, so they do not qualify for the child tax credit. Russell's Social Security number is 664-98-5678 and Linda's is 554-98-3946. They made an estimated tax payment to the IRS of $2,500 on December 31, 2017.

Required: Complete the Long's tax return including Form 1040 and the provided schedules and forms.

Do not complete Form 4562 (depreciation). You may ignore any related self-employment taxes. Make realistic assumptions about any missing data.

If required, enter a "loss" as a negative number on the tax form. Do not enter deductions or other amounts as negative numbers.

If an amount box does not require an entry or the answer is zero, enter "0".

Do not round any division. If required, round your final answers to the nearest dollar.