Gary Holstrum (SSN: 222-33-4444; DOB: 04/01/1975) and his wife Karen Holstrum (SSN: 555- 66-7777; DOB: 09/03/1975) have two children; Antonio (SSN: 888-99-7777; DOB: 02/04/2001) and Georgiana (SSN: 222-55-4444; DOB: 02/07/2003). Both Antonio and Georgiana are fulltime students and qualify as federal income tax dependents of Gary and Karen. They live at: 1234 Canal Blvd, Thibodaux, LA 70301. Karen is a seventh-grade English teacher at the local middle school. Gary has his own manufacturing business. Garys business, Kool Beads, is an unincorporated manufacturer of Mardi Gras beads. The factory is located at 1003 LaPlace Avenue, New Orleans, LA 34455. Gary uses the accrual method of accounting in his business. He has the following transactions during the 2022 year: Sales (less sales returns and allowances) $1,075,xxx (last three digits of your Nicholls ID) Purchases 600,000 Direct factory labor 175,000 Utilities 10,000 Insurance 60,000 Office Expenses 7,000 Administrative Salary Expenses 45,000 Legal Services 5,000 Travel Expenses (4,000 entertainment exp.) 20,000 Maintenance 18,000 Kools inventory on December 31, 2022 is $165,000. Inventory was $140,000 on January 1, 2022. Kools depreciation schedule is as follows: 1. Purchased $40,000 of office furniture and equipment held for business use on March 4, 2022. The assets have a 7-year life. Gary wants to maximize the current year deduction by taking the bonus depreciation. 2. Depreciation on recovery property acquired and placed into service: Property Placed into service Property Class Cost Method Truck January 2018 7-year 15,000 MACRS Equipment June 2019 7-year 20,000 MACRS Factory May 2017 39-year 260,000 MACRS Land May 2017 ? 40,000 ? Gary did not elect a Section 179 deduction for any of the assets above, nor did he take advantage of the depreciation bonus. Garys estimated taxes paid in 2022 include: $6,400 for federal income taxes each quarter and $1,600 for state income taxes each quarter. Karen Holstrums salary for 2022 was $54,xxx (last three digits of your Nicholls ID). She had $6,600 withheld for federal income taxes and $1,750 withheld for Louisiana state income taxes. The entire family is covered under health insurance through Karens job. The cost of the insurance is included in the total cost of medical bills listed below. Gary and Karens personal expenses for the year are as follows: Credit card debt $ 1,200 Qualified medical bills 6,000 Real property taxes 5,000 Home mortgage interest 9,500 Cash contributions to First Baptist church 4.000 Gary also donated 100 shares of QRS stock to the State University with a FMV of $9,500, on June 16, 2022. The stock was purchased in 2014 when the value was $1,500. QRS is a publicly traded stock. Gary and Karen paid $6,000 for tuition and fees for Antonio, who is a Junior at Nicholls State University. Antonio is living at home while attending college and he meets all of the tests to be claimed as a dependent. Gary and Karen choose to take the education credit over the tuition and fees deduction. Garys father passed away in 2021. In 2022, Gary and Karen received $50,000 in life insurance proceeds. Gary and Karen support Karens mother, Joy Freud (333-66-9999), in an assisted living facility in Houma. They paid 75% of her support in 2022. Joys only income is $10,000 nontaxable social security benefits. Joy had the Medicare for the full tax year. Gary and Karen had several stock transactions during the year: Date Shares Selling Price Basis _____ 06/15 Sold 100 shares JAN $25/share Paid $80 each on 07/16/2016. 08/25 Sold 75 shares EPR $55/share Paid $50 each on 09/26/2021. 09/21 Sold 25 shares SEP $46/share Paid $25 each on 08/01/2010. Interest and dividend income is as follows: Hibernia Bank $950 interest Chase Bank $600 interest GHJ Stock (Domestic Corporation) $200 dividend YTR Stock (Domestic Corporation) $300 dividend New Orleans Municipal Bonds $150 interest Gary plays black jack at Harrahs Casino on occasion. This year he had $4,000 in gambling winnings and $3,000 in losses. Gary and Karen did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency