Dave (SSN 412-34-5670) and Alicia (SSN 412-34-5671) Stanley are married and retired at age 51. The couple's income consists of rental property, stock investments, and royalties from an invention. They sold their large house that they had purchased six years ago for $580,000 on October 18, 2015, for $1 million. They now live in a condo at 101 Magnolia Lane, Suite 15, High Park, FL 34761.

The rental property is an apartment complex (building cost $1.5 million and was purchased January 5, 2015) with 30 units that rent for $27,000 per month and are at 90% occupancy.

Rental income

$291,600

Salaries

115,000

Payroll taxes

8,798

Real estate taxes

18,750

Interest

45,000

Repairs and maintenance

29,000

Depreciation

(Calculate)

The following information is also for the year:

1099-INT

Old Bank

$ 22,000

1099-DIV

Dell, Inc.

Ordinary dividends

15,250

Qualified dividends

15,250

1099-DIV

IBM, Inc.

Ordinary dividends

8,650

Qualified dividends

8,650

1099-DIV

Pepsi, Inc.

Ordinary dividends

18,785

Qualified dividends

18,785

1099-MISC

Box 2 royalties

152,300

Purchased

Sold

Sale Price

Basis

Gain/Loss

Dell (held 9 mo.)

12/01/14

09/01/15

$15,000

$9,000

$6,000

Pepsi (held 4 mo.)

09/01/15

12/29/15

17,000

25,000

(8,000)

IBM (held 30 mo.)

06/05/13

12/05/15

38,000

20,000

18,000

Page 12-39

On January 3, 2016, Dave repurchased the exact number of shares he sold on December 29, 2015. The Stanleys paid $13,000 each quarter (four payments) in federal estimated income taxes.

Prepare Form 1040 for the Stanleys. Taxpayers had qualifying health care coverage at all times during the tax year. You will also need Schedule B, Schedule D, Schedule E, and Form 4562.