Name: Jane Doe SSN: 444-44-4444

Address: 555 Any Street, Anytown, CA 90000

Marital Status: Single Minor Children: 0

Summary: Jane Doe (DOE) runs a sheep farm and road side fruit stand (the "Farm"). The Farm began in 2020 and has been in continuous operation ever since. This is DOE main source of income. The Farm has employees but no contractors. The Farm reports its financial activity using the accrual-basis method (details below). Upon starting the Farm, DOE purchased several assets, as detailed below.

For all assets, DOE's accountant claimed depreciation as follows:

2020 Truck 1 (9,000 Lbs. GVW): $60,000 Price (MACRS 200% DB-HY)

2020 Truck 2 (7,000 Lbs. GVW): $40,000 Price (MACRS 200% DB- HY)

2020 Trailer: $30,000 Price (MACRS 200% DB-HY)

In 2022, DOE had the following financial activity:

Mortgage Interest on Form 1098: $20,000 (Farm)

Mortgage Interest on Form 1098: $12,000 (Personal Residence)

State Income Taxes Paid in 2022: $8,000

Property Taxes: $11,000 (Farm)

Property Taxes: $5,000 (Personal Residence)

Medical Expenses: $15,000 of which $12,000 was for health insurance premiums

Charitable Cash Gifts: $3,000

Form 1099-INT: $500 in Box 1

Form 1099-DIV (ABC, Inc.): $300 in Box 1(a)

Form 1099-DIV (XYZ, Inc.): $4,000 in Box 2(a)

2022 IRA Contribution: $6,000

The Farm's Financials:

EIN: 55-5555555

DBA: Anytown Farm to Table Address: 188 Rich Earth Road, Anytown, CA 90000

Payments received/earned from customers: $505,000

Payments made/due and other information for her business:

Beginning inventory $3,000

$132,000 cost of livestock and grain purchases;

Ending inventory $6,000 $8,000 equipment rental fees;

$3,000 in accounting and legal fees;

$30,000 tree care and conservation expenses;

$60,000 in utilities and water;

$5,000 in veterinary expenses;

$6,000 in car and truck expenses (100% business use)

$90,000 in wage labor;

and $7,000 in payroll taxes.

1.-What is the net farm profit on Line 34 of Schedule F?

A.$111,040

B.$80,050

C.$108,040

2.-What is the amount on Line 26 of Schedule 1?

A.$19,845

B.$33,689

C.$25,845

3.-What is the amount on Form 1040 Line 12?

A.$18,800

B.$28,000

C.$25,000

D.$12,550

4.-What is the Adjusted Gross Income (AGI) and Taxable Income?

A.$85,995 / $69,995

B.$89,995 / $62,995

C.$89,995 / $64,995

5.-What is the Total Tax Due on Line 24 of Form 1040?

A.$25,601

B.$35,732

C.$15,732