David R. and Susan Holman

art 2: Comprehensive Tax Return Problems COMPREHENSIVE TAX RETURN PROBLEM 1. David R. and Susan L. Holman a. David and Susan Holman are married and file a joint return. David is 38 years of age and Susan is 36. David is a self-employed certified real estate appraiser (C.R.E.), and Susan is employed by Wells Fargo Bank as a trust officer. They have two children: Richard Lawrence, age seven, and Karen Ann, age four. The Holmans currently live at 5901 W, 75th Street, Los Angeles, California 90034, in a home they purchased and occupied on September 6, 2017 Until August 12, 2017 the Holman family lived at 3085 Windmill Lane in Dallas, Texas, where David was employed by Vestpar Company, a real estate ap- praisal company and Susan was a bank officer for First National Bank. They sold their home in Dallas and moved to Los Angeles so that Susan could assume her new job as a trust officer and David could become self-employed. b. The Holmans purchased their new home for $$25,000 by making a S125,000 down payment and financing the remaining balance with a 30-year, 6% conventional mortgage loan from California Federal Savings and Loan. They were required to prepay two points (58,000) in return for the favorable mortgage terms, New furni- ture and drapes cost an additional $27.500, c. The Holmans received the following Forms W-2, reporting their salaries for 2017 I. David R. Holman, Social Security No. 452-64-5837: Gross salary from Vestpar, Inc Federal income taxes withheld $95,000 9,050 FI.C.A. taxes withheld: Social Security 4,650 1,088 3,000 Califormia income taxes withheld 2. Susan L. Holman, Social Security No. 467-32-5452: First National Wells Fargo Total Gross salary Federal income taxes withheld FICA taxes withheld: $17,500 1,100 534,000 4,150 $51,500 5,250 Social Security. ' Medicare 1,085 254 2,108 493 3,193 747 First National Bank Wells Fargo Bank Total California income taxes withheld.... 2,950 2,950 d. On October 1. 2017 David rented office space at 5510 Wacker Drive, Los Angeles, California 90025. The terms of the one-year lease agreement called for a monthly rent of $800, with the first and last month's rent paid in advance. David decided to operate his business in the name of "David R. Holman, Certified Real Estate Appraiser," and he elected to use the cash method of accounting for his revenues and expenses. The following items relate to his business for 2017: art 2: Comprehensive Tax Return Problems COMPREHENSIVE TAX RETURN PROBLEM 1. David R. and Susan L. Holman a. David and Susan Holman are married and file a joint return. David is 38 years of age and Susan is 36. David is a self-employed certified real estate appraiser (C.R.E.), and Susan is employed by Wells Fargo Bank as a trust officer. They have two children: Richard Lawrence, age seven, and Karen Ann, age four. The Holmans currently live at 5901 W, 75th Street, Los Angeles, California 90034, in a home they purchased and occupied on September 6, 2017 Until August 12, 2017 the Holman family lived at 3085 Windmill Lane in Dallas, Texas, where David was employed by Vestpar Company, a real estate ap- praisal company and Susan was a bank officer for First National Bank. They sold their home in Dallas and moved to Los Angeles so that Susan could assume her new job as a trust officer and David could become self-employed. b. The Holmans purchased their new home for $$25,000 by making a S125,000 down payment and financing the remaining balance with a 30-year, 6% conventional mortgage loan from California Federal Savings and Loan. They were required to prepay two points (58,000) in return for the favorable mortgage terms, New furni- ture and drapes cost an additional $27.500, c. The Holmans received the following Forms W-2, reporting their salaries for 2017 I. David R. Holman, Social Security No. 452-64-5837: Gross salary from Vestpar, Inc Federal income taxes withheld $95,000 9,050 FI.C.A. taxes withheld: Social Security 4,650 1,088 3,000 Califormia income taxes withheld 2. Susan L. Holman, Social Security No. 467-32-5452: First National Wells Fargo Total Gross salary Federal income taxes withheld FICA taxes withheld: $17,500 1,100 534,000 4,150 $51,500 5,250 Social Security. ' Medicare 1,085 254 2,108 493 3,193 747 First National Bank Wells Fargo Bank Total California income taxes withheld.... 2,950 2,950 d. On October 1. 2017 David rented office space at 5510 Wacker Drive, Los Angeles, California 90025. The terms of the one-year lease agreement called for a monthly rent of $800, with the first and last month's rent paid in advance. David decided to operate his business in the name of "David R. Holman, Certified Real Estate Appraiser," and he elected to use the cash method of accounting for his revenues and expenses. The following items relate to his business for 2017