Comprehensive Problem 3-2A

Russell (birthdate February 2, 1971) and Linda (birthdate August 30, 1976) 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 (EIN: 32-1456789). The business is operated out of their home, located at 1234 Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russell's bookkeeper provided the following income statement from the landscaping business:

Lawns and Landscapes Income Statement 12/31/2022
	Current Period		Prior Period
	1/1/2022 to 12/31/2022	1/1/2021 to 12/31/2021
REVENUES
Lawn maintenance	$85,000		$71,998
Lawn and plant installation	35,000		48,576
Other	17,100		8,001
TOTAL REVENUES	137,100		128,575
COST OF SERVICES
Salaries	85,000		78,445
Payroll Taxes	6,800		6,432
Equipment Rental	12,500		10,651
Maintenance (Equipment)	8,300		8,435
Special Clothing and Safety Shoes	660		200
Contract Labor	7,780		6,790
TOTAL COST OF SERVICES	121,040		110,953
GROSS PROFIT (LOSS)	16,060		17,622
OPERATING EXPENSES
Advertising and Promotion	1,500		700
Donations	600		500
Insurance	4,000		870
Meals and Entertainment	2,300		2,100
Subscriptions	120		120
Business Gifts	790		600
Telephone	2,015		1,956
Training	1,975		-
Travel	865		750
Other	1,700		2,724
TOTAL OPERATING EXPENSES	15,865		10,320
NET INCOME (LOSS)	195		$7,302

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.
• No business gift exceeded $22 in value.
• The subscription is for a trade magazine titled Plants Unlimited.
• Meals and entertainment expense is $1,500 of restaurant business meals and $800 for season tickets to Boise State University that Russell uses to entertain potential clients.
• Russell drove his pickup truck (purchased 3/14/2021) 200 business miles through June 30 and 800 business miles for the remainder of 2022. He also drove the truck 2,300 commuting miles and 3,000 other miles. The Longs have another car available for personal use. Truck business mileage is not reflected in the income statement.

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 192 square feet and their house has a total of 1,600 square feet. They pay $13,200 per year rental on their house, and the utilities amount to $1,800 for the year.

The Longs inherited a large number of acres of farm land from Linda's father in 2021 and sold it immediately for its market value of $1,000,000. They invested the proceeds in the Potato Dividend High Yield Fund and received Form 1099-DIV (see separate tab).

Linda lost her job in late 2021 and collected unemployment as shown on Form 1099-G (see separate tab).

Russell was divorced on April 1, 2020 and pays his ex-spouse, Lois Long (SSN 313-29-3133) alimony of $200 per month in 2022.

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 $300 on December 31, 2022.

Required: Complete the Longs' federal tax return for 2022 on Form 1040, Schedule 1, Schedule B, Schedule C, Form 8829, and the Qualified Dividends and Capital Gain Tax Worksheet.

• Do not complete Form 4562 (depreciation) or Form 8812 (additional child tax credit). 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.