Individual Tax Return Problem $3$

Required:

$$ Use the following information to complete Phillip and Claire Dunphy$$s $2023$ federal income tax return using the practice lab software. If any information is missing, use reasonable assumptions to fill in the gaps.

Facts:

$1.$ Phillip and Claire are married and file a joint return. Phillip is self$-$employed as a real estate agent, and Claire is a homemaker. Phillip and Claire have three dependent children. All three children live at home with Phillip and Claire for the entire year.

The Dunphys provide you with the following additional information:

$$ The Dunphys do not want to contribute to the presidential election campaign.

$$ The Dunphys live at $3701$ Brighton Avenue, Miami, Florida $33166.$

$$ Phillip$$s birthday is $11/5/1976$ and his Social Security number is $321-$XX$-5766.$

$$ Claire$$s birthday is $5/12/1979$ and her Social Security number is $567-$XX$-1258.$

$$ Haley$$s birthday is $11/6/2010$ and her Social Security number is $621-$XX$-7592.$

$$ Alex$$s birthday is $2/1/2012$ and her Social Security number is $621-$XX$-8751.$

$$ Luke$$s birthday is $12/12/2016$ and his Social Security number is $621-$XX$-9926.$

$$ The Dunphys do not have any foreign bank accounts or trusts.

$2.$ Phillip and Claire received $$320$ of interest from State Savings Bank on a joint account. They also received a qualified dividend of $$390$ on jointly owned stock in Xila Corporation.

$3.$ Phillip$$s full$-$time real estate business is named $$Phillip Dunphy Realty.$$ His business is located at $645$ Grove Street, Miami, Florida $33166,$ and his employer identification number is $93-3488888.$ Phillip$$s gross receipts during $2023$ were $$350,000.$ Phillip uses the cash method of accounting for his business. Phillip$$s business expenses are as follows:

Advertising $$4,200$

Professional dues $800$

Professional journals $200$

Employee wages $49,000$

Insurance on office contents $1,120$

Accounting services $2,300$

Miscellaneous office expense $400$

Utilities and telephone $3,260$

Payroll taxes $3,640$

Depreciation To be calculated

$4.$ On April $20,2023$ Phillip moved his business into a newly constructed and equipped office on Grove Street. Phillip$$s expenditures for the new office building are as follows:

Date Acquired Asset Cost

$3/20/23$ Land $ $200,000$

$3/20/23$ Office building $500,000$

$3/20/23$ Furniture $80,000$

$4/1/23$ Computer system $40,000$

$5.$ Phillip computes his cost recovery allowance using MACRS. He elects NOT to use $179$ immediate expensing or any bonus depreciation. Phillip has never claimed $179$ or bonus depreciation before.

$6.$ Phillip also has office equipment that was originally purchased in $2020.$ He has been using MACRS $(7-$year property$)$ and the half$-$year convention since the original purchase:

Date Acquired Asset Original Cost Accumulated Depreciation as of Beginning of the Year

$4/12/20$ Office equipment $70,00049,840$

$7.$ Phillip uses his $2019$ Honda Pilot to show properties to his clients. The car was originally placed in service on July $1,2019.$ In $2023$ he used the car $2,000$ miles commuting to and from work, $18,000$ miles for business and $6,000$ miles other $($personal$).$

$8.$ Phillip and Claire contributed $$6,000$ each to a traditional IRA.

$9.$ The Dunphys paid $$1500$ per month $($$$18,000)$ for family health insurance coverage.

$10.$ The Dunphys made timely estimated federal income tax payments of $$10,000$ each quarter during $2023$

$11.$ Assume the Dunphys take the standard deduction in $2023.$