David R. and Sheri N. Johnson (ages 45 and 46) are married and live at641 Cody Way, Casper, WY 82609. David is a consulting engineer, whileSheri is a paralegal. They file a joint return and use the cash basis for taxpurposes.

1.Trained as a mining engineer, David has developed considerableexpertise in the treatment and disposition of waste material. He is alsowellversed in the Federal and state requirements for land reclamationprojects. David maintains a consulting practice through which headvises clients on these matters. David's business activity code is541990. Most of his clients are small and mediumsize mineowner/operators located in Wyoming and contiguous states (e.g.,Montana, Idaho, Utah). Usually, David is retained by a client on acontract fee basis and is reimbursed for all outofpocket expenses. Inperforming his services, David usually visits the job site and latersubmits his recommendations in a written report along with astatement for his services and expenses. David received the followingamounts from his consulting business in 2015:

2.The following fees for rendered services are not included in the receiptslisted in item 1 above:

Echo Mining: Payment received January 2016; work doneDecember 2015

$5,100

Sesa Mining: Payment received January 2015; work doneDecember 2014

4,400

Cormorant Mining: No payment received; work done March2015

3,700

3.David did not incur travel expenses in any of these engagements (i.e.,the work was done in his office). As Cormorant Mining is in bankruptcy,David does not expect to collect any of this fee.

4.Other expenses paid by David in 2015 relating to his practice are listedbelow.

Contribution to H.R. 10 (Keogh) retirement plan$9,000

Premiums on medical insurance (covering self, spouse, anddependents)

3,800

Landscape models purchased from topographer for reclamationprojects

3,200

Advertising in trade journals

2,400

Office supplies (including drafting materials)

1,200

Business phone and Internet service

860

State occupation license

300

Subscriptions to trade journals

240

Membership dues to trade associations

180

5.David operates his consulting business out of an office in his home. Hehas qualified expenses for business us of his home of $6,546 anddepreciation of $9,390 (put these numbers on Schedule C).

6.On February 4, 2014, David paid $41,000 (including sales tax) for a usedInfiniti crossover SUV (gross weight under 6,000 pounds), which heuses 90% of the time for business. The depreciation for this vehicle isincluded in the number given to you in #5, and you do not need toprepare a form 4562 for this business. His operating expenses for theInfiniti for business in 2015 are as follows:

Gasoline $3,300Auto insurance

1,600Repairs 240Auto club dues

180

Oil changes and lubrication

120

License and registration

60

7.During business use, David received three moving traffic violations(total fines of $680) and incurred tolls and parking charges of $440. TheInfiniti was driven a total of 14,500 miles during 2015 (mileage wasincurred evenly during the year).

8.Sheri is a licensed paralegal and is employed on a parttime basis byseveral local attorneys. She commuted to work using the familySuburban for a total of 813 miles and paid parking fees of $310. Herearnings and jobrelated expenses are summarized below.

Salary (from four employers)$38,000Laptop computer1,200Subscriptions and dues to professional

organizations

180

Continuing education correspondence course120Occupational license fee

80

9.Sheri purchased the laptop computer on March 12 and uses it 80% ofthe time for business. The correspondence course is requiredcontinuing education so she can retain her license (prepare form 4562for this).

10.Sheri is considering going to law school, so she attended a series ofLSAT preparation sessions at a cost of $350. Because Sheri is a parttimeemployee, she is not covered by any of her employers' medical orretirement plans. Sheri is covered under David's insurance, and during2015, she contributed $5,000 to a traditional IRA that she establishedseveral years ago. The Johnsons use the automatic mileage method tocalculate any tax deductions that they are entitled to for use of theSuburban.

11.With funds received from the settlement of his father's estate, Davidpurchased rental property at 4620 Cottonwood Lane, Casper, WY82609. Of the $250,000 purchase price, $30,000 was allocated to theland. After an $80,000 renovation to the house (e.g., new flooring, roof,heating unit), the property was rented beginning February 1, 2009. In2013, the Johnsons decided that their investment would be moremarketable if the house was rented as furnished. Consequently, in Mayof that year, they spent $38,000 on new furniture (including drapes,carpeting, and appliances). Under the current lease agreement, theproperty rents for $2,200 a month (payable at the beginning of eachmonth) with utilities not included. Information regarding the propertyfor 2015 appears below.

Rent received

$28,600Property/casualty insurance premiums paid3,100Property taxes paid

2,400

Yard maintenance paid

1,200Repairs 800

12.The rent received includes $2,200 for January 2016. The tenantsprepaid the rent in midDecember because they went on vacationduring the Christmas/New Year holidays. In addition to the propertytaxes listed above, David paid a special tax assessment of $2,400 to thecity of Casper for repaving the street in front of the property. TheJohnsons use MACRS to depreciate the rental home and the furnishingswithin it (assume halfyear convention for the personalty).

13.The Johnsons acquired 1,000 shares of common stock in CormorantMining on March 7, 2014, to hold for investment purposes. Davidperformed services for the company in late 2013, submitting a bill for$3,900. Because Cormorant was experiencing cashflow problems at thetime, David accepted the stock as payment for his services.Unfortunately, Cormorant is currently in bankruptcy (see item 2 above),and expectations are that the shareholders will not recover anything ontheir stock investments. The stock is not publicly traded.14.David inherited an antique gun collection from his father when hediedmainly large caliber rifles used for buffalo hunting. AlthoughDavid has no idea what his father's cost basis was in these guns, thecollection had a dateofdeath value of $22,000. Concerned about themaintenance and security of the collection, David sold it to a dealer for$29,000 on July 10, 2015.

15.Although the Johnsons had several Schedule D transactions during2014, they ended up with a net shortterm capital loss of $7,000. Of thisloss, $3,000 was deducted in 2014, and $4,000 carried over to 2015.

16.For several years, Sheri's widowed mother, Vivian Olson, has lived withthe Johnsons and has been claimed by them as a dependent. OnDecember 30, 2014, Vivian suffered a heart attack. After six days in theICU of a local hospital, Vivian died. In early February 2015, the Johnsonspaid the following expenses related to Vivian:

Burial expenses

$4,400Medical expenses incurred in 20144,200Medical expenses incurred in 20153,100Remainder of church pledge for 2015600

17.Fortunately, the balance of Vivian's medical expenses ($11,900) wascovered by insurance. Besides personal and household effects, Vivian'smajor asset was life insurance. As the designated beneficiary of thepolicy, Sheri received $20,000 of death benefits on March 13, 2015.

18.Besides the items already mentioned, the Johnsons had the followingreceipts during 2015:

Interest income:City of Cheyenne general purpose bonds$1,900CD at Wells Fargo Bank1,100Money market account at Bank ofAmerica 400Yard (garage) sale

950

Qualified dividends on MeadowlarkCorporation common stock

700

Jury duty fees

420

19.The yard sale involved used furniture, appliances, books, toys, and otherhousehold goods having an estimated original cost value of $1,800. Inconnection with her jury duty assignment in June, Sheri drove theSuburban 40 miles and incurred expenses of $30 for parking and $45for meals.

20.In addition to the items already noted, the Johnsons had the followingexpenditures for 2015:

Interest on home equity loan used to financethe purchase of personal items (e.g., camper)

$4,400

Charitable contributions (not including Vivian'spledge)

3,200

Ad valorem property taxes on personalresidence

3,100

Medical and dental bills (including prescriptiondrugs of $400) other than those relating toVivian (see item 13)

4,800

21.The Johnsons drove the Suburban 420 miles to various medical anddental appointments. Wyoming has no state or local income tax butdoes impose a general sales tax. The county in which they live imposesan additional local sales tax of 1%. Although they do not keep track oftheir sales taxes, they purchased a camper for $40,000 in May 2015. Thesales tax on this purchase was $1,600.

22.During 2015, a tornado totally destroyed the Johnsons townhome inFlorida. It cost $60,000 in 2001, its FMV before the tornado was$80,000. The family collected insurance reimbursement of $50,000.

23.Besides Vivian (see item 13), the Johnsons' household includes twodaughters, Meredith (age 20), who works as a night worker at QuickTrip with income of $25,350 for the year, and Kirby (age 12), and oneson, Toby (age 7). Toby attends an afterschool program at a localdaycare center costing $4,250 per year. See the information below.

Horizons Day Care and After School452 South Patriot RoadCasper, WY 82609EIN 43659832424.For tax year 2014, the Johnsons had an overpayment of $150, whichthey applied toward their 2015 income tax. Sheri's income taxwithholdings for the year are $5,100, and the Johnsons made Federalquarterly tax payments totaling $16,000 ($4,000 each installment).25.Relevant Social Security numbers are noted below.

NameSocial Security Number

David Johnson111-11-1112Sheri Johnson123-45-6785Vivian Olson123-45-6786Meredith Johnson123-45-6787Kirby Johnson123-45-6788Toby Johnson123-45-6789

Requirements

Prepare a Federal income tax return, (with appropriatesupporting forms and schedules unless told not to in theproblem) for the Johnsons for 2015. In doing this, follow theseguidelines:

Make necessary assumptions for information not given but

needed to complete the return.

The taxpayers are preparing their own return (i.e., no

preparer is involved).

The taxpayers have the necessary written substantiation

(e.g., records, receipts) to support the transactions involved.

If any refund is due, apply it toward next year's taxes.The Johnsons do not wish to contribute to the Presidential

Election Campaign Fund.

Do not prepare a state tax