PART 3 OF QUESTION, PLEASE READ PART 1,2 & 3. TO ANSWER QUESTION

Other relevant information:

• Bruce has decided that he wants to minimize his tax as much as legally possible and has requested your assistance in preparing his 2019 Federal income tax return.
• Bruce has asked you to depreciate as much of the capital expenditures as legally possible, but he does not want to use IRC Sec 179 expense or first year bonus depreciation. The company has adopted the accrue method of accounting for inventory and cash method for all other purposes.On March 15, 2019, York Technology Inc. filed for bankruptcy resulting in a total loss for its only two shareholders. Bruce and a friend founded the company on May 15, 2013, with each owning 50% of the outstanding shares. Both Bruce and his friend each initially contributed $25,000 in exchange for their 50% interest in the company.Bruce and Alice earned $2,500.00 interest income from savings in 2019.Bruce earned $3,000 in interest income from US Treasury Bonds in 2019.On October 18, 2019, Bruce received $1,500 of dividend income from JP Morgan Chase Stock, which he purchased on September 01, 2019.On November 15, 2019, Bruce sold some of his JP Morgan Stock for $48,000, which he purchased on July 01, 2018 for $38,000.Bruce was named as the sole beneficiary on his late mothers life insurance policy, and on December 31, 2019, Bruce received a check for $100,000 from the insurance company, which he held and deposited on January 02, 2019. On June 13, 2019, Bruce sold 1,000 shares Citibank Stock for $25,000. He purchased the stock on May 17, 2018 for $24,000. On November 04, 2019, Alice received a settlement award for injuries sustained in 2018. The settlement award included the following amounts:
  • Reimbursements of medical expenses which were not deducted on previous tax returns $10,000
  • Loss income $15,000
  • Punitive damages $30,000
  • Compensatory relating to a broken leg $25,000

• On October 15, 2019, the truck purchased by Bruce and used exclusively for the business was totally destroyed in an auto accident. Bruce sued the driver of the automobile and received a damage award in December 2019 of $30,000. Bruce used the money to invest in the stock market. Since 2019 was the year of acquisition, no depreciation on the truck was previously taken.

• On November 03, 2019, Bruce determined that a personal loan to a friend was uncollectible because his friend had recently and unexpectedly died. The amount of the loan was $4,200.
• Bruce collected $8,000.00 per month for three months (October December) in rental income on 581 Atlantic Avenue. For 2019 Bruce paid mortgage interest of $5,000 and real estate taxes of $5,750.00. Bruce paid no other expenses in 2019 for 581 Atlantic Avenue. The property was placed in service on October 01, 2019.

• Other Rental Income and Expenses included:

Pinebrook Property Avenue A Property

Rental Income $35,000.00 $72,000.00

Mortgage Interest Expense $10,000.00 $12,000.00

Real Estate Taxes $6,000.00 $9,000.00

Utilities $2,000.00 $3,000.00

Insurance $1,000.00 $2,000.00

Water & Sewer $1,200.00 $1,500.00

Place in Service 01/01/2006 01/01/2019

Purchase Price $449,000.00 805,000.00

• Bruce and Alice 2019 W-2 statement shows the following wages and withholdings:

Alice Bruce

1. Wages $65,000 $30,000
2. FWT 12,500 8,000
3. SWT 7,000 5,000
4. CWT 6,000 5,000

• The Jones also paid the following personal expenses in 2019:

1. Contributions to Museum of Modern Art:
   1. Cash $55,000
   2. JP Morgan Chase Stock -FMV $60,000 (Long Term) -A/B $45,000
2. Real Estate Taxes on primary residence $14,000
3. Mortgage Interest on primary residence $20,000
4. Unreimbursed medical expenses $17,000
5. Student loan Interest $3,000

Instructions: Make realistic assumptions about any missing or inconsistent data and state your assumptions on a separate typed schedule.

Required:

1. Prepare form 1040, including all schedules and forms for 2019. (Do not prepare NYS or NYC tax returns).
2. All work must be typed onto approved IRS forms (no hand written forms will be accepted).
3. Read chapter 8 to determine how to handle depreciation/amortization and IRC section 179.
4. Only hand in the appropriate forms and schedules.