Individual Income Tax Project (20 points)

Based on the following information, complete Lawrences 2016 Form 1040, Schedule A, Schedule C and Schedule D.

The following facts relate to Andrew Lawrence and Jane V. Lawrence, who are married and file a joint return in 2016. They do not have any dependents who can be claimed on the tax return.

Andrew Lawrence is the sole proprietor of a business that operates under the name Andrew Lawrence Furniture (Business Code 337000). The proprietorship is located at 1234 First Avenue, City, ST 55555. Andrew started the business with a $200,000 capital investment on June 1,2007. The proprietorship uses the calendar year as its tax year (the same as its proprietor). The income statement for the current year, is presented below.

Sales	632422
Sales returns and allowances	(29,242 )
Cost of goods sold	(540204)
Gross Profit	62976
Operating expenses
Depreciation and section 179 expense deduction (not included in the cost of good sold)	(12467)
Advertising Expenses	(13000)
Office Expenses	(16000)
Meals and entertainment	(8000)
Salaries paid to employees	(17200)
Net Loss	-3700

Depreciation expense is 27,476-15,000=12,476. The proprietorship uses MACRS depreciation for tax purposes. The current year tax depreciation is $27,476. Of this amount, $15,000 is included in cost of goods sold and inventory.

Employees other than Andrew Lawrence receive $17,200 salary.

Meals and entertainment expenses are 50% deductible.

Jane V. Lawrence is an employee with Amuck Corporation. Her salary on W-2 is 78,000 for this year. She made $5, 500 contribution to her conventional Individual Retirement Account (IRA). And she does not have an employer sponsored retirement plan.

Information for Itemized Deductions:

1. Jane Lawrence has paid the following medical cost in the current year:

Medical insurance premiums paid from after-tax income $1,500

Tooth extraction $900

Surgery to remove facial wrinkles: $3,500

Nonprescription drugs: $200

Hearing aid: $2,600

Received medical insurance reimbursements of $500 in the current year and $200 in January of the next year.

2. Jane V. Lawrence has paid IL state income taxes of $3,900 for this year.

3. They have paid $10,000 property tax for their primary residence.

4. They have made a $1,000 check contribution to a Church.

5. During the year, Jane V. Lawrence paid the business expenses shown in the following information, and her employer did not reimburse any of these expenses.

Unreimbursed airfares for business trips $2,200

Cost of meals during which business was discussed with potential customers. $820

Entertainment for clients immediately after a business discussion. $770

Cost of a business gift to a client $50

Information for Schedule D

The Lawrences had no capital loss carryovers from prior years. During the year, the Lawrences had the following stock transactions on their Etrade Form 1099 B statement. They did not receive any dividends.

Date Acquired Date Sold Sales Price Cost Basis Buster Co. 2/1/ 2013 3/17/2016 $15,000 $35,000 Copper lnc. 2/18/2016 4/1/2016 $8,000 $4,000

Requirement: complete the Lawrences 2016 Form 1040, Schedule A, Schedule C and Schedule D.

Please complete the line 7 through the line 43 on Form 1040.

Please complete the line 1 through the line 29 on Schedule A.

Please complete the line 1 through line 31 on Schedule C.

Please complete the line 1 through line 21 on Schedule D.