Federal income for 2018, schedule 1, C, D and Form 8949
thholding for the taxable income. REHENSIVE PROBLEMS $28,345 ate July 1, 1987) and Amy (birthdate July 4, 1989) Booth Ild 8 Information regarding their income, expenses, and withholding fo are unsure which of these items must be used to calculate taxable inco 17,490 500 1. Ken (birthdate July 1, 19 the following informati year. They are unsure whi Income: Ken's salary (salesman) Amy's wages (part-time nurse) Insurance reimbursement for repairs from an 2,000 auto accident Gift from Uncle George 833 Interest income from Lodge State Bank Federal income taxes withheld: 2,600 From Ken's salary 650 From Amy's wages bed "The Disk Drive." The store Amy owns and operates a computer bookstore named The DISK cated at 2000 Broadway Street Menomonie, WI 54751. The business EIN is 27- 1234567 and the principal business code for bookstores is 451211. During 2018, Amy had the following income and expenses: Sales of books $320,985 Expenses 15,985 Store rental 6,150 Office expense 11,700 Advertising 1,020 City business license 83,550 Payroll 8,392 Payroll taxes 8,050 Utilities Other 3,000 Cost of inventory sold 184,855 Amy treats inventory as non-incidental materials and supplies. This year, Amy loaned a friend $10,000 so that he could make an investment. Instead of making the investment, the friend lost all the money gambling and left for parts unknown. Amy has no hope of ever collecting on this bad debt. Ken, who ordinarily never gambles, won $20,000 at a casino birthday party for one of his friends. The Booths provide the sole support for Ken's parents, Rod (Social Security num- ber 124-80-9050) and Mary (Social Security number 489-37-6676) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI 54751, and their Social Security numbers are 343-75-3456 (Ken) and 123-45-7890 (Amy). Required: Complete the Booths' federal income tax return for 2018 on Form 1040, Schedule 1, Schedule C, Schedule D, and Form 8949. A statement is required to be ached to a return for a nonbusiness bad debt, but this requirement may be ignored for this problem. Assume no 1099-bis hled in association with association with the bad debt when filling out Form 8949. Questions and Problems 3-47 2A. Russelotdate February 2, 1967) and Linda (birthdate August 30, 1972) Long have brought you the following information regarding their income and ext muormation regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Law Landscapes Unlimited. The business is operated out of their home, located Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russell's book keeper provided the following income statement from the landscaping business. Lawns and Landscapes Income Statement 12/31/2018 Current Period 1/1/2018 to 12/31/2018 Prior Period 1/1/2017 to 12/31/2017 REVENUES Lawn maintenance Lawn and plant installation Other TOTAL REVENUES $ 82,345.00 34,568.00 17,097.00 134,010.00 71,998.00 48,576.00 8,001.00 128,575.00 COST OF SERVICES Salaries Payroll Taxes Equipment Rental Maintenance (Equipment) Special Clothing and Safety Shoes Contract Labor TOTAL COST OF SERVICES 83,412.00 6,673.00 12,600.00 8,316.00 660.00 7,780.00 119,441.00 78,445.00 6,432.00 10,651.00 8,435.00 200.00 6,790.00 110,953.00 GROSS PROFIT (LOSS) 14,569.00 17,622.00 OPERATING EXPENSES Advertising and Promotion Donations Insurance Business Meals Subscriptions Business Gifts Telephone Training Travel Other TOTAL OPERATING EXPENSES 1,500.00 600.00 4,000.00 2,300.00 120.00 790.00 2,015.00 1,975.00 865.00 1,780.00 15,945,00 700.00 500.00 870.00 2,100,00 120.00 600.00 1,956.00 750.00 2,724.00 10,320.00 NET INCOME (LOSS) (1,376.00) $ 7,302.00 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 in- cludes 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 land- scaper. The tuition fees, and books cost $1,400. He also drove his personal car 57 miles round trip to Boise to take exams three times for a total of 171 miles. No business gift exceeded $22 in value. 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 200 square feet and their house has a total of 1.600 square feet. They pay $12,600 per year rental on their house, and the utilitie to $3,000 for the year. apter 3. Business Income and Expenses The Longs also have the following interest income for the year: Interest from Idaho Bank and Trust bond portfolio $42,810 The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively. 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 $2,500 on December 31, 2018. Required: Complete the Longs' federal tax return for 2018 on Form 1040, Schedule 1, Schedule 5, Schedule B, Schedule C, and Form 8829. Do not complete Form 4562 (depreciation) 2B. Christopher Crosphit (age 42) owns and operates a health club called "Catawba Fitness." The business is located at 4321 New Cut Road, Spartanburg, SC 29303. The principal business code is 812190. Chris had the following income and expenses from the health club: Income $216,100 Expenses: Business insurance 3,665 Office supplies 3,295 Payroll 98,900 Payroll taxes 9,112 Travel 2,420 Equipment & club maintenance 10,720 Cleaning service 8,775 thholding for the taxable income. REHENSIVE PROBLEMS $28,345 ate July 1, 1987) and Amy (birthdate July 4, 1989) Booth Ild 8 Information regarding their income, expenses, and withholding fo are unsure which of these items must be used to calculate taxable inco 17,490 500 1. Ken (birthdate July 1, 19 the following informati year. They are unsure whi Income: Ken's salary (salesman) Amy's wages (part-time nurse) Insurance reimbursement for repairs from an 2,000 auto accident Gift from Uncle George 833 Interest income from Lodge State Bank Federal income taxes withheld: 2,600 From Ken's salary 650 From Amy's wages bed "The Disk Drive." The store Amy owns and operates a computer bookstore named The DISK cated at 2000 Broadway Street Menomonie, WI 54751. The business EIN is 27- 1234567 and the principal business code for bookstores is 451211. During 2018, Amy had the following income and expenses: Sales of books $320,985 Expenses 15,985 Store rental 6,150 Office expense 11,700 Advertising 1,020 City business license 83,550 Payroll 8,392 Payroll taxes 8,050 Utilities Other 3,000 Cost of inventory sold 184,855 Amy treats inventory as non-incidental materials and supplies. This year, Amy loaned a friend $10,000 so that he could make an investment. Instead of making the investment, the friend lost all the money gambling and left for parts unknown. Amy has no hope of ever collecting on this bad debt. Ken, who ordinarily never gambles, won $20,000 at a casino birthday party for one of his friends. The Booths provide the sole support for Ken's parents, Rod (Social Security num- ber 124-80-9050) and Mary (Social Security number 489-37-6676) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI 54751, and their Social Security numbers are 343-75-3456 (Ken) and 123-45-7890 (Amy). Required: Complete the Booths' federal income tax return for 2018 on Form 1040, Schedule 1, Schedule C, Schedule D, and Form 8949. A statement is required to be ached to a return for a nonbusiness bad debt, but this requirement may be ignored for this problem. Assume no 1099-bis hled in association with association with the bad debt when filling out Form 8949. Questions and Problems 3-47 2A. Russelotdate February 2, 1967) and Linda (birthdate August 30, 1972) Long have brought you the following information regarding their income and ext muormation regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Law Landscapes Unlimited. The business is operated out of their home, located Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russell's book keeper provided the following income statement from the landscaping business. Lawns and Landscapes Income Statement 12/31/2018 Current Period 1/1/2018 to 12/31/2018 Prior Period 1/1/2017 to 12/31/2017 REVENUES Lawn maintenance Lawn and plant installation Other TOTAL REVENUES $ 82,345.00 34,568.00 17,097.00 134,010.00 71,998.00 48,576.00 8,001.00 128,575.00 COST OF SERVICES Salaries Payroll Taxes Equipment Rental Maintenance (Equipment) Special Clothing and Safety Shoes Contract Labor TOTAL COST OF SERVICES 83,412.00 6,673.00 12,600.00 8,316.00 660.00 7,780.00 119,441.00 78,445.00 6,432.00 10,651.00 8,435.00 200.00 6,790.00 110,953.00 GROSS PROFIT (LOSS) 14,569.00 17,622.00 OPERATING EXPENSES Advertising and Promotion Donations Insurance Business Meals Subscriptions Business Gifts Telephone Training Travel Other TOTAL OPERATING EXPENSES 1,500.00 600.00 4,000.00 2,300.00 120.00 790.00 2,015.00 1,975.00 865.00 1,780.00 15,945,00 700.00 500.00 870.00 2,100,00 120.00 600.00 1,956.00 750.00 2,724.00 10,320.00 NET INCOME (LOSS) (1,376.00) $ 7,302.00 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 in- cludes 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 land- scaper. The tuition fees, and books cost $1,400. He also drove his personal car 57 miles round trip to Boise to take exams three times for a total of 171 miles. No business gift exceeded $22 in value. 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 200 square feet and their house has a total of 1.600 square feet. They pay $12,600 per year rental on their house, and the utilitie to $3,000 for the year. apter 3. Business Income and Expenses The Longs also have the following interest income for the year: Interest from Idaho Bank and Trust bond portfolio $42,810 The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively. 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 $2,500 on December 31, 2018. Required: Complete the Longs' federal tax return for 2018 on Form 1040, Schedule 1, Schedule 5, Schedule B, Schedule C, and Form 8829. Do not complete Form 4562 (depreciation) 2B. Christopher Crosphit (age 42) owns and operates a health club called "Catawba Fitness." The business is located at 4321 New Cut Road, Spartanburg, SC 29303. The principal business code is 812190. Chris had the following income and expenses from the health club: Income $216,100 Expenses: Business insurance 3,665 Office supplies 3,295 Payroll 98,900 Payroll taxes 9,112 Travel 2,420 Equipment & club maintenance 10,720 Cleaning service 8,775
