Jonathan and Madelyn Stewart are married and live at 1800 Melrose Place, Virginia Beach, VA 23453. They have two children Taylor and Jason who lived with them the entire year. They do not wish to contribute to the Presidential Election campaign fund. Their daytime telephone number is 757-555-6678. Note: Use your own name in place of Taylor Stewart.

Below is their information:

Name Birthdate SSN

Jonathan P. Stewart 07/24/73 227-15-5555

Madelyn L. Stewart 04/13/74 226-21-7948

(Your Name) Stewart 01/04/2007 226-13-4594

Jason P. Stewart 10/16/2010 385-14-8972

The Stewarts also support two other individuals who do not live in their house: 1) They support Madelyns mother, Shirley Hall (Birthdate: 06/15/1946; SSN: 227-89-3322) who lives in an assisted living facility in Virginia Beach. Shirleys gross income for the year was $4,000. 2) They also support Jonathans son from his previous marriage, Jack P. Stewart (SSN: 225-64-1234) (Birthdate: 11/03/1997). Jack lives in an apartment and attends college part-time at ODU. He earned $7,370 in wages from his part-time job as a bartender.

The entire Stewart family, including Shirley and Jack all have minimum essential health coverage.

1. Jonathan received a W-2 from his employer as an Attorney with the following information:

Hall, Crumb & Associates.

10400 Columbus Avenue, Virginia Beach, VA 23453

EIN: 13-5569876

Wages $98,500

Federal withheld 11,220

State taxes withheld 4,200

Social Security tax 6,107

Medicare tax 1,428

Madelyn received a W-2 from her job as a Teacher with the following information:

Virginia Beach Public Schools

206 Main Street, Virginia Beach, VA 23453

EIN: 58-2345899

Wages $37,500

Federal withheld 2,680

State taxes withheld 1548

Social Security tax 2,325

Medicare tax 544

In addition, Jonathan and Madelyn received the following:

Community Bank interest (EIN: 13-2416396) of $212.

Beach Savings & Trust interest (EIN: 13-1112222) of $48.

City of Norfolk municipal bond interest (EIN: 58-2996632) of $600.

NXT Corporation dividend (all qualified) (EIN: 13-4561234) of $148

VT Growth mutual fund (EIN: 13-9854122)

Capital gain distribution (line 2a) 22

Ordinary dividend (all qualified) 127

Nondividend distribution (adj basis was 50) (line 3) 24

Total 173

2. VA Dept. of Taxation (EIN: 13-4478512) 2016 state tax refund $ 925

(Note: The 2016 standard deduction for married filing joint was 12,600.)

Items from 2016 tax return:

Adjusted Gross Income $135,220

Total itemized deductions $13,250

State tax deduction $5,650

Sales tax deduction $0.

3. Alimony paid to Jonathans former spouse jill scott (SSN: 224-16-7777) $9,640

4. Jonathans Gambling winnings: from Harrahs Casino (EIN: 13-2229999) in Atlantic City, NJ $1,200 won on 7/8).

5. Jonathan and Madelyn received From 1099-B (basis not reported to IRS) with the following capital transactions. No adjustment codes are needed. Enter on Form 8949 of Sch. D:

Item Purch Sold

40 shares - ohemgee stock 10/13/10 08/13/17 Sales price: $3,460 Basis: $ **

50 shares - elohel stock 11/10/16 09/21/17 Sales price: $ 4,500 Basis: $ 5,280

100 shares - Huh stock 6/21/11 07/26/17 Sales price: $ 2,400 Basis: $ 1,000

** The Stewarts originally purchased 150 shares of the Ohemgee stock on 10/13/10 for $6,300.

6. Jonathan likes to spend his spare time practicing photography. He wants to specialize in landscape photography. Pursuant to this desire, Jonathan has a photography business and incurs the following expenses:

Photography supplies $1,835

Travel to locations to take photos 2,872

During the year, Jonathan sells 7 photos for $250 each. (He received Form 1099-Misc from ACME Co.) In the last five years, Jonathan has had similar results with this business.

7. As a school teacher, Madelyn is often asked to teach her neighbors children. She does this work on the side. This year, she began an entrepreneurial venture (1/08/17) which is small, but profitable. Because she teaches on location, Madelyn has no rent expense. She did not set up a home office either. She also did not make any payments that would require filing Forms 1099. Below is the information for Madelyns cash basis teaching business:

Name: A-Plus Learning

Business address and ID: (Use personal information)

Business Activity type: Education Services

Business Activity Code: 611000

Tutoring Fees $5,140 (No Forms 1099-MISC received)

Expenses:

Business Miles 184

Total Commuting Miles 9400

Other Personal Miles 5800

Total Miles driven 15,384

(Madelyn keeps a written log of her auto miles. Use the standard mileage rate.)

City business license $150

Supplies $210

Liability Insurance $120

8. During the year, Jonathan and Madelyn paid the following amounts (all of which can be substantiated):

Home mortgage interest (Commerce Bank) $12,140

Mastercard interest 750

Real estate taxes on personal residence 2,700

Property taxes on cars 262

Unreimbursed hospital bills 2,200

Prescription medicine 380

New eyeglasses and exam for Jack 450

Income tax preparation fee 200

Gambling losses 1,800

Charitable contribution:

Church 930

VA Democratic Party 220

United Way 120

Noncash (Salvation Army) 235

Owens family (house fire victims) 100

9. Because their home is so close to the beach, the Stewarts rented out their home for one week in August. During that time, the Stewarts went away on vacation. They received $2,600 in rental income. The utilities for that week were $324. (Hint: See Example 8-9 in Ch. 8.)

10. As a teacher, Madelyn spent a total of $215 on her class for supplies, teaching aides, etc. She kept her receipts.

11. Madelyns father passed away in 2016. In February 2017, Madelyn received a check for $10,000 of life insurance proceeds. Madelyns mother Shirley Hall also received a check for $80,000 of life insurance proceeds which she immediately invested in a certificate of deposit.

12. The Stewarts made quarterly estimated tax payments on Form 1040-ES because they thought their federal withholdings would not be enough to cover the additional income from the photography business, rental and tutoring business.

Paid 4/15/2017 $400

Paid 6/14/2017 $400

Paid 9/15/2017 $400

Paid 1/10/2018 $400

13. If they have any amount due or refund, they want it handled by a check.

Required: Complete Form 1040 for Jonathan and Madelyn Stewart for the 2017 tax year.