Denise Lopez, age $40,$ is single and has no dependents. She

ProConnect Tax

is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing

Services located near the campus of Florida Atlantic University at $1986$ Campus Drive,

Boca Raton, FL $33434.$ Denise is a material participant in the business, she is a cash

basis taxpayer, and her Social Security number is $123-45-6781.$ Denise lives at $2020$

Oakcrest Road, Boca Raton, FL $33431.$ Denise wants to designate $$3$ to the Presidential

Election Campaign Fund. She has never owned or used any virtual currency. During

$2022,$ Denise had the following income and expense items:

a$.$ $$100,000$ salary from Legal Services, Inc.

b$.$ $$20,000$ gross receipts from her typing services business.

c$.$ $$700$ interest income from Third National Bank.

d$.$ $$1,000$ Christmas bonus from Legal Services, Inc.

e$.$ $$60,000$ life insurance proceeds on the death of her sister.

f$.$ $$5,000$ check given to her by her wealthy aunt.

g$.$ $$100$ won in a bingo game.

h$.$ Expenses connected with Typing Services: i$.$ $$9,500$ interest expense on a home mortgage $($paid to Boca Raton Savings and

Loan$).$

j$.$ $$15,000$ fair market value of silverware stolen from her home by a burglar on

October $12,2022.$ Denise had paid $$14,000$ for the silverware on July $1,2012.$

She was reimbursed $$10,000$ by her insurance company.

k$.$ Denise had loaned $$2,100$ to a friend, Joan Jensen, on June $3,2018.$ Joan

declared bankruptcy on August $14,2022,$ and was unable to repay the loan.

Assume that the loan is a bona fide debt.

Legal Services, Inc., withheld Federal income tax of $$14,000$ and the

appropriate amount of FICA tax from her wages. m$.$ Alimony of $$10,000$ received from her former husband, Omar Guzman; divorce

was finalized on December $2,2013,$ and no changes have been made to the

divorce decree since that time.

n$.$ Interest income of $$800$ on City of Boca Raton bonds.

o$.$ Denise made estimated Federal tax payments of $$2,000.$

p$.$ Sales taxes from the sales tax table of $$953.$

q$.$ Property taxes on her residence of $$3,200.$

r$.$ Charitable contribution of $$2,500$ to her alma mater, Citrus State College.

s$.$ On November $1,2022,$ Denise was involved in an automobile accident. At the

time of the accident, her automobile's FMV was $$45,000.$ After the accident, the

automobile's FMV was $$38,000.$ Denise acquired the car on May $2,2021,$ at a

cost of $$52,000.$ Denise's car was covered by insurance, but, because the policy

had a $$5,000$ deduction clause, Denise decided not to file a claim for the

damage.

Part $1-$Tax Computation

Compute

$\text{'}$s $2022$ Federal income tax payable $($or refund due$),$ and

complete her $2022$ Federal tax return using appropriate forms and schedules.

Suggested software: ProConnect Tax.

Part $2-$Tax Planning Part $2-$Tax Planning

In $2023,$ Denise plans to continue her job with Legal Services, Inc. As a result, items a$,$

$d,$ and $1$ will recur in $2023.$ Denise plans to continue her typing services business

$($refer to item b$)$ and expects gross receipts of $$34,000.$ She projects that all business

expenses $($refer to item h$)$ will increase by $10\%,$ except for office rent, which, under

the terms of her lease, will remain the same as in $2022.$ Items e$,$ f$,$ g$,$ j$,$ k$,$ and s will not

recur in $2023.$ Items c$,$ i$,$ m$,$ n$,$ p$,$ q$,$ and r will be approximately the same as in $2022.$

Based on this information, Denise would like you to provide a tentative computation

of her $2023$ taxable income. Prepare a memo for her tax files that details this

computation.