INDIVIDUAL TAX RETURN PROBLEM

You need to modify the problem in the following ways:

1.IGNORE the assets sold at the end of Facts 4. By ignore the assets sold in Facts 4, I mean do not do anything with them. Don't sell them, and don't depreciate them. Act as if they do not exist. You DO have to deal with the assets purchased by the company from Facts 4.

2. Ignore the phase-out threshold for any personal and dependent exemptions allowed on line 42 of the 1040.

3. You need to complete and submit all of the attached forms (1040, 4562, Sch C and Sch SE).

Required:

Use the following information to complete Phillip and Claire Dunphy's 2016 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps. Ignore the alternative minimum tax for this problem.

Any required forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.

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 flight attendant. 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, Los Angeles, California 90018.

Phillip's birthday is 11/5/1969 and his Social Security number is 321-44-5766.

Claire's birthday is 5/12/1972 and her Social Security number is 567-77-1258.

Haley's birthday is 11/6/2003 and her Social Security number is 621-18-7592.

Alex's birthday is 2/1/2005 and her Social Security number is 621-92-8751.

Luke's birthday is 12/12/2009 and his Social Security number is 621-99-9926.

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

2. Claire is a flight attendant for Western American Airlines (WAA), where she earned $57,000 in salary. WAA withheld federal income tax of $6,375, state income tax of $1,800, Los Angeles city income tax of $675, Social Security tax of $3,600, and Medicare tax of $825.

3. Phillip and Claire received $300 of interest from State Savings Bank on a joint account. They also received a qualified dividend of $395 on jointly owned stock in Xila Corporation.

4. Phillip's full-time real estate business is named ?Phillip Dunphy Realty.? His business is located at 645 Grove Street, Los Angeles, California 90018, and his employer identification number is 93-3488888. Phillip's gross receipts during the year were $730,000. Phillip uses the cash method of accounting for his business. Phillip's business expenses are as follows:

Advertising $ 5,000

Professional dues 800

Professional journals 200

Employee wages 48,000

Insurance on office contents 1,120

Accounting services 2,100

Miscellaneous office expense 500

Utilities and telephone 3,360

Payroll taxes 3,600

Depreciation To be calculated

On March 20, Phillip moved his business out of the old offices at 1103 Allium Lane into a newly constructed and equipped office on Grove Street. Phillip sold the old office building and all its furnishings. Phillip's expenditures for the new office building are as follows:

Date Acquired Asset East 320 Land $ S WED foice building 2,5D, 31'20 Furniture 2D{]_D #1 Computer system B EH Artwork 1 SUEDE) Date Aeguired SHEETS EfQ Tfg Bi d EHBIM Asset D'Ffiee building Land FumiIJJre Furniture Office equipment lElem puters Sales Price $le EDD El 1DJD WEDGE HDJU'DU llllriginal test $Q WEDGE 239,0(10 324m:- HEDGE BED-DD Aewrnulated Depreciation as of Beginning of the'iiear $129,825 D EDEQQE 222,?32 6152451- 'I