Jane Smith, age 40, is single and has no dependents. She is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing Services located near the campus of Florida Atlantic University at 1986 Campus Drive. Jane is a material participant in the business. She is a cash basis taxpayer. Jane lives at 2021 Oakcrest Road, Boca Raton, FL 33431. Jane's Social Security number is 123-45-6789. Jane indicates that she wants to designate $3 to the Presidential Election Campaign Fund. Jane had health insurance for all months of 2016. During 2016, Jane had the following income and expense items:

a.

$100,000 salary from Legal Services, Inc.

b.

$20,000 gross receipts from her typing services business.

c.

$700 interest income from Third National Bank.

d.

$1,000 Christmas bonus from Legal Services, Inc.

e.

$60,000 life insurance proceeds on the death of her sister.

f.

$5,000 check given to her by her wealthy aunt.

g.

$100 won in a bingo game.

h.

Expenses connected with the typing service:

Office rent	$7,000
Supplies	4,400
Utilities and telephone	4,680
Wages to part-time typists	5,000
Payroll taxes	500
Equipment rentals	3,000

i.

$9,500 interest expense on a home mortgage (paid to San Jose Savings and Loan).

j.

$15,000 fair market value of silverware stolen from her home by a burglar on October 12, 2016. Jane had paid $14,000 for the silverware on July 1, 2007. She was reimbursed $1,500 by her insurance company.

k.

Jane had loaned $2,100 to a friend, Joan Jensen, on June 3, 2013. Joan declared bankruptcy on August 14, 2016, and was unable to repay the loan. Assume that the loan is a bona fide debt.

l.

Legal Services, Inc., withheld Federal income tax of $16,000 and the appropriate amount of FICA tax from her wages.

m.

Alimony of $10,000 received from her former husband, Ted Smith.

n.

Interest income of $800 on City of Boca Raton bonds.

o.

Jane made estimated Federal tax payments of $1,000.

p.

Sales taxes from the sales tax table of $946.

q.

Property taxes on her residence of $1,100.

r.

Charitable contribution of $2,500 to her alma mater, Citrus State College.

s.

on November 1, 2016, Jane was involved in an automobile accident. At the time of the accident, Jane's automobile had an FMV of $45,000. After the accident, the automobile's FMV was $38,000. Jane acquired the car at a cost of $52,000. Jane's car was covered by insurance, but because the policy had a $5,000 deduction clause, Jane decided not to file a claim for the damage.

Required:

Compute Jane Smith's 2016 Federal income tax payable (or refund due). Use Form 1040, Schedule A, Schedule C, Schedule D and Form 4684. (Note: There is a separate Form 4684 for each casualty or theft.)

Make realistic assumptions about any missing data.

If an amount box does not require an entry or the answer is zero, enter "0".

Enter all amounts as positive numbers. However, unless instructed otherwise, use the minus sign to indicate a loss.

It may be necessary to complete the tax schedules before completing Form 1040.

When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

Complete Jane Smith's Schedule A for 2016.

SCHEDULE A (Form 1040) Department of the Treasury Internal Revenue Service (99)	Itemized Deductions ? Information about Schedule A and its separate instructions is at www.irs.gov/schedulea. ? Attach to Form 1040.	OMB No. 1545-0074
		2016 Attachment Sequence No. 07

Name(s) shown on Form 1040 JANE SMITH

Your social security number

123-45-6789

Medical and Dental Expenses

Caution. Do not include expenses reimbursed or paid by others.

1

Medical and dental expenses (see instructions) . . . . . . . . .

1

2

Enter amount from Form 1040, line 38 . . . . . . . . . . .

2

3

Multiply line 2 by 10% (0.10). But if either you or your spouse was born before January 2, 1952, multiply line 2 by 7.5% (0.075) instead . . . . . . . . . . . . . . . . . . . . .

3

4

Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . . . . . . . . . . . . . . . .

4

Taxes You Paid

5

State and local(check only one box):

a ? Income taxes

}

. . . . . . . . . . . . . . . . . . . . .

5

b ? General sales taxes

6

Real estate taxes (see instructions) . . . . . . . . . . . . . . . . .

6

7

Personal property taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

7

8

Other taxes. List type and amount ? _ _ _ _ _ _ _ _ _ _

8

9

Add lines 5 through 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

Interest You Paid Note. Your mortgage interest deduction may be limited (see instructions).

10

Home mortgage interest and points reported to you on Form 1098 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10

11

Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address ? _ _ _ _ _ _ _ _ _ _ _ _ _ _

11

12

Points not reported to you on Form 1098. See instructions for special rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

13

Mortgage insurance premiums (see instructions) . . . . . . .

13

14

Investment interest. Attach Form 4952 if required. (See instructions.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

15

Add lines 10 through 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

Gifts to Charity If you made a gift and got a benefit for it, see instructions.

16

Gifts by cash or check. If you made any gift of $250 or

more, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

17

Other than by cash or check. If any gift of $250 or more, see instructions. You must attach Form 8283 if over $500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

18

Carryover from prior year . . . . . . . . . . . . . . . . . . . . . . . . .

18

19

Add lines 16 through 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19

Casualty and Theft Losses

20

Casualty or theft loss(es). Attach Form 4684. (See instructions.) . . . . . . . . . . . . . . . . . .

20

Job Expenses and Certain Miscellaneous Deductions

21

Unreimbursed employee expensesjob travel, union dues, job education, etc. Attach Form 2106 or 2106-EZ if required.

(See instructions.) ? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

21

22

Tax preparation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22

23

Other expensesinvestment, safe deposit box, etc. List type and amount ? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

23

24

Add lines 21 through 23 . . . . . . . . . . . . . . . . . . . . . . . . .

24

25

Enter amount from Form 1040, line 38 . . . . . . . . . . .

25

26

Multiply line 25 by 2% (0.02) . . . . . . . . . . . . . . . . . . . . .

26

27

Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . . . . . . . . . . . . .

27

Other Miscellaneous Deductions

28

Otherfrom list in instructions. List type and amount ? _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

28

Total Itemized Deductions

29

Is Form 1040, line 38, over $155,650?

?	No. Your deduction is not limited. Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40.	}	. . . . . . .
?	Yes. Your deduction may be limited. See the Itemized Deductions Worksheet in the instructions to figure the amount to enter.

29

30

If you elect to itemize deductions even though they are less than your standard deduction, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

? ?

KIA

For Paperwork Reduction Act Notice, see Form 1040 instructions.

Schedule A (Form 1040) 2016

Use the 2016 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.)

2016 Tax Rate Schedules
SingleSchedule X											Head of householdSchedule Z
If taxable income is: Over		But not over		The tax is:				of the amount over			If taxable income is: Over		But not over		The tax is:				of the amount over
$0		$9,275		. . . . . .		10%		$0			$0		$13,250		. . . . . .		10%		$0
9,275		37,650		$927.50	+	15%		9,275			13,250		50,400		$1,325.00	+	15%		13,250
37,650		91,150		5,183.75	+	25%		37,650			50,400		130,150		6,897.50	+	25%		50,400
91,150		190,150		18,558.75	+	28%		91,150			130,150		210,800		26,835.00	+	28%		130,150
190,150		413,350		46,278.75	+	33%		190,150			210,800		413,350		49,417.00	+	33%		210,800
413,350		415,050		119,934.75	+	35%		413,350			413,350		441,000		116,258.50	+	35%		413,350
415,050		. . . . . .		120,529.75	+	39.6%		415,050			441,000		. . . . . .		125,936.00	+	39.6%		441,000
Married filing jointly or Qualifying widow(er)Schedule Y-1											Married filing separatelySchedule Y-2
If taxable income is: Over		But not over		The tax is:				of the amount over			If taxable income is: Over		But not over		The tax is:				of the amount over
$0		$18,550		. . . . . .		10%		$0			$0		$9,275		. . . . . .		10%		$0
18,550		75,300		$1,855.00	+	15%		18,550			9,275		37,650		$927.50	+	15%		9,275
75,300		151,900		10,367.50	+	25%		75,300			37,650		75,950		5,183.75	+	25%		37,650
151,900		231,450		29,517.50	+	28%		151,900			75,950		115,725		14,758.75	+	28%		75,950
231,450		413,350		51,791.50	+	33%		231,450			115,725		206,675		25,895.75	+	33%		115,725
413,350		466,950		111,818.50	+	35%		413,350			206,675		233,475		55,909.25	+	35%		206,675
466,950		. . . . . .		130,578.50	+	39.6%		466,950			233,475		. . . . . .		65,289.25	+	39.6%		233,475