Note: This problem is for the 2018 tax year.

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 2020 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 2018. During 2018, 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, 2018. Jane had paid $14,000 for the silverware on July 1, 2008. She was reimbursed $10,000 by her insurance company.

k.

Jane had loaned $2,100 to a friend, Joan Jensen, on June 3, 2014. Joan declared bankruptcy on August 14, 2018, 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 $15,000 and the appropriate amount of FICA tax from her wages.

m.

Alimony of $10,000 received from her former husband, Ted Smith; divorce was finalized in 2012, and no changes have been made to the divorce decree since that time.

n.

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

o.

Jane made estimated Federal tax payments of $2,000.

p.

Sales taxes from the sales tax table of $946.

q.

Property taxes on her residence of $3,200.

r.

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

s.

on November 1, 2018, 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 2018 Federal income tax payable (or refund due) by providing the requested information that would be reported on Form 1040, Schedule A, Schedule C, Schedule D and Form 4684.

• Make realistic assumptions about any missing data.
• If an answer is zero, enter "0".
• Enter all amounts as positive numbers.
• When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

Filing status: The taxpayers' filing status: Single

2. Calculate taxable gross income. $

3. Calculate the total adjustments for AGI. $

4. Calculate adjusted gross income. $

5. Calculate the greater of the standard deduction or itemized deductions. $

6. Calculate the qualified business income deduction. $

7. Calculate total taxable income. $

8. Calculate the income tax liability. $

9. Calculate the total tax credits available. $

10. Calculate total withholding and tax payments. $

11. Calculate the amount overpaid (refund): $

12. Calculate the amount of taxes owed: $

Calculate the deduction allowed for medical and dental expenses. $

2. Calculate the deduction for taxes. $

3. Calculate the deduction for interest. $

4. Calculate the charitable deduction allowed. $

5. Calculate the casualty and theft loss deduction allowed. $

6. Calculate total itemized deductions: $

1. What is the tax treatment for Janes Christmas bonus? Indicate the form and line on which it is reported.

2. What are the tax consequences for Janes loss from the burglary? Indicate the section of the tax code that warrants your answer.

3. How will Jane report the damage suffered from her car accident? Indicate the section of the tax code that warrants your answer.

4. What is the tax treatment for the loan to Joan Jensen? Indicate the section of the tax code that warrants your answer.

5. Why does Jane report sales tax rather than state income tax paid? Would this be the same if she worked in Michigan?

6. Show the calculation for the tax liability.