Han and Leia Solo are married filing a joint federal tax return for the tax year 2021. Their Adjusted Gross Income is in-excess of $450,000. They have one dependent age 21 who is a fulltime student. Han and Leia purchased a townhouse in Coruscant in 2012 for $700,000 which is now valued at $1,750,000. They have lived in the townhouse continuously since they purchased it in 2012. After much discussion, the Solos decided that they wanted to leave the hustle and bustle of the city behind and move to a quieter location. The real estate taxes on the Coruscant property are $5,250 per year. With the help of Boba Fett Realty (BFR) they found a gorgeous 30-acre lakefront property on Lake Tatooine with incredible views and vistas of the Dune Sea and the Greedo Mountains. The lakefront property was purchased by its owners for $1,475,000 in 2018. The owners of the Lake Tatooine property wanted to move to the city since their commute to Coruscant was too long and they missed some of the amenities of the city. So, the Solos and the owners of the Lake Tatooine property exchanged properties on June 30, 2021. No cash changed hands in the transaction. In 2021 the Village of Mos Eisley valued the property at $3,150,000 and assessed real property taxes on the both the home and the out-parcels of property. Jobba the Assessor determined that the home represented 30% of the value and the out-parcels represented the remaining 70% of the value for the property. The real estate taxes on the Lake Tatooine property are $31,500 per year. The Solos hired Storm and Trooper Construction Company (S&TCC) to repair and remodel the existing home. Force Architectural and Engineering was retained to perform feasibility and design for the renovation. However, their investigation revealed the vermin infested and termite-eaten home on the property had been built a long, long time ago. Forces lead architect Yoda Force warned the Solos that the home was too old to be rehabbed and the cost prohibitive. It seems that the old lakefront home never really fit the Solos entertaining and galaxy trotting lifestyle. So, they decided to demolish the home and built their dream stone and log cabin. In addition, they wanted a hanger and landing strip for the Millennium Falcon and Millennium Falcon II. S&TCC estimated that it would cost $25,000 to $50,000 to demolish the old home. All the necessary permits to demolish the home were obtained from the Village of Mos Eisley but Han balked at the cost of demolition. Being clever and wanting a tax deduction, Han and Leia decided to donate the home to the Mos Eisley Rebellion Fire Departments (MORFED) for a training exercise. On October 1, as part of fire prevention month, MORFED burned down the structure and then put out the fire. MORFED charged Han and Leia $2,000 to haul away the burned out remains of the old home. A construction contract to build the home, a hanger with offices and a landing strip was signed with S&TCC on September 15, 2021. The cost of building the home is $1,250,000. They paid 20% of the cost in cash and borrowed the balance from the Next Empire and Republic Bank (NERB) with 30-year home mortgage loan secured by the principal residence at 3.35% per annum with NERB on September 22, 2021. The closing costs included points of 1% to buy down the interest rate from 4.55%. Separately, Han entered signed construction contract with S&TCC to build the hanger with offices and the airstrip on September 30, 2021. The hanger with offices and the airstrip houses Galactic Shipping LLC (GSLLC). The cost of the hanger with offices is $1,600,000. GSLLC will borrow 90% of the construction cost of the hanger with offices from NERB on a ten year note at a below market rate of interest of 0.125%. Han and Leia are personally guaranteeing the loan from NERB to GSLLC. The landing strip will cost another $1,245,000 to build. Han and Leia have decided to subdivide some of the 30-acre property to finance the building of the landing strip. They anticipate that they can sell six (6) two-acre lots for $389,000 apiece through BFR that is charging a 5% commission. BFR sold all six lots, in December 2021. Han purchased a used spaceship that named the Millennium Falcon II in the second quarter of 2021 from Vaders Spaceships for $750,000. The hyper-drive and the navigation system were replaced in the third quarter of 2021 in the Millennium Falcon II at a cost of $1.92 million. Leia complained to Han that the Millennium Falcon IIs interior was old and tired looking and in need of upgrading. Han agreed that it could use some new seats, bathrooms and sleeping quarters. The new interior cost $1.8 million Han financed the purchase and upgrades by borrowing the money from Nabu National Guild Bank at 3%. The Millennium Falcon II was used 60% for business and 40% for personal purposes. Han took the Millennium Falcon II out for a test flight, and he was caught at light speed in a no light speed zone. Normally, Han can talk his way out of anything, but November is Space Safety Month in the Empire, so he got a ticket. Leia was not pleased when she found out that Han had to pay a fine of $10,000. Leia is uninterested in the business and is more interest in saving the planet from destruction. Unknown to Han, Leia donated his antiques blasters to Stop the Sith Foundation. (StSF) Han paid $160,000 for the prized pieces and they are conservatively valued at ten (10) time the purchase price. She also made a pledge to StSF in the amount of $200,000. She gave them a check in the amount of $35,000 on December 31, 2021. During the last meteor storm which was declared a disaster in May 2021 the Solos two droids were destroyed. Han purchased droids for $10,0000 apiece from Jawa Equipment Distributing Inc. (JEDI) in 2019. The fair market value of the droids prior to their destruction was $7,500 apiece and after the meteor shower, they have a fair market value of $500 apiece. They each had an adjusted basis of $4,800. Han received $1,000 in total insurance proceeds for the two droids. The Solos purchased new droids at a cost of $20,000 apiece and are used 100% for business. Han placed them in service on December 31, 2021. Han and Leia also have a small get-away place in Endor Estates that they rent out occasionally (13 days in 2021) for $1,000 per day. They lived there the entire time that their new home on lake Tatooine was being built. BFR approached them about renting the vacation home for 100 days during 2022. There would be a management charge of 18.5% of rental income by BFR. The management charge would cover advertising for guests, routine maintenance, and housekeeping. Leia purchased 1000 shares of stock in Wookie World for $22 per share on November 4, 2016. Slowly but surely the fair market value of the stock rose over the next couple of years. On March 7, 2021, Leia sold fifty percent (50%) of her shares in Wookie World for $57 per share. On July 12, 2021, Leia bought 200 shares of Light Sabers Enterprises Inc. (LSEI) for $19 per share but sold them on July 24, 2021, for $18 per share. By August 1, 2021, when Leia repurchased 200 shares of LSEI the share price had dropped to $14 per share. She was sure that the price would turn around and by November 18, 2021, LSEI was trading at $34 per share. Afraid that another correction would take place Leia sold her LSEI holding on December 27, 2021, for $36 per share. Han and Leias (mom and dad college age child Chewie (age 21) is attending Inter-galactic State University studying cosmic navigation and business as a fulltime student. Chewie had a summer job at GSLLC where he earned $12,000. He also received $15,000 from mom and dad and scholarships and grants used for tuition, fees, and books in the amount of $20,000. Mom and Dad also provide Chewie with health insurance at an annual cost of $7,000