Question
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2020, Janice opened her own office located at
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2020, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6782. Janices parents continue to provide health insurance for her under their policy. Janice did not engage in any virtual currency transactions during the year and wants to contribute to the Presidential Election Campaign Fund. Janice received the appropriate coronavirus rebates (economic impact payments); related questions in ProConnect Tax software should be ignored.
During 2020, Janice reported the following income and expense items connected with her business.
Income from sale of articles $ 95,000
Rent 16,500
Utilities 7,900
Supplies 1,800
Insurance 5,000
Travel (including meals of $1,200) 3,500
Janice purchase and placed into service the following fixed assets for her business. Janice wants to elect immediate expensing under IRC 179, if possible.
- Furniture and fixtures (new) costing $21,000 on January 10th;
- Computer equipment (new) costing $12,400 on July 28th.
Janices itemized deductions include:
State Income Tax $ 2,950
Home Mortgage Interest to
First National Bank 6,000
Property Taxes on home 2,500
Charitable Contribution to her
Alma Mater, State College 1,200
Janice did not keep a record of the sales tax she paid. The amount allowed by the Sales Tax Table is $437.
Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. Janice makes estimated tax payments of $5,000 for 2020.
Required:
Compute Janice Morgans 2019 Federal Income Tax payable (or refund due) and complete her 2020 tax return using the appropriate forms and schedules, suggested software ProConnect Tax but I like Lacerte. Hint: You will need Forms 1040, 4562, 8995, and Schedules 1, 2, A, B, C & SE.
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