Patrick A. and Danielle R. Beckman File a joint return for 2018. The Beckmans rent a three bedroom apartment located at 529 W. Maywood #4, Aurora, IL 60505 They provide half of the support for Danielle's mother, Ellen Tyler (SSN 384-58-73 their dependent. Ellen lives in a nursing home in Peoria, Illinois. The Beckmans claim their 20-year-old daughter, Tara (SSN 487-58-3957) as a dependent. Tara lives with the Beckmans while attending college full-time.

Danielle (SSN 394-59-3948) works full-time for an advertising firm. Through her employer, Danielle gets full health care insurance coverage for her family. In 2018, Danielle's Taxable wages were $59,000, from which her employer withheld $6,000 in federal income taxes, $3,869 in social security taxes, $905 in Medicare taxes, and $1,020 in state income taxes. Danielle is an active participant in her employer's 401 (k). During the year, Danielle contributed $3,400 to her 401(k). Danielle and Patrick each contributed $1,500 to their respective traditional IRAs for 2018.

Patrick (SSN 549-82-2497) is self-employed. He began his carpet cleaning business in 2015. The business code for Schedule C (line B) is 812990. Patrick uses the spare bedroom in the apartment solely and exclusively as a home office to perform administrative tasks. The bedroom is 220 square feet in size. The square footage of the entire apartment is 1,800 square feet. Patrick elects to use the safe harbor method to compute his home office deduction. Patrick uses the cash method. During the year, his business income was $18,000, and he paid $1.828 for cleaning chemicals and supplies, $300 for advertising, and $50 for office expenses.

On September 10, 2017, Patrick purchased carpet-cleaning equipment for $14,762. This was the only depreciable property placed in service in 2017. The equipment is 5-year property. Patrick did not elect Section 179 in 2017. He did take bonus depreciation and uses regular MACRS to depreciate the equipment. On June 8, 2018, Patrick purchased a computer for $1,600 and a printer for $400. Patrick uses the computer and printer 40% for business and 60% for personal use. Patrick has written evidence to support the 40% business use. The computer and printer were Patrick's only acquisitions in 2018.

Patrick uses his van to get to and from customers' homes. During the year Patrick drove 1,797 miles for business. He keeps a written log as evidence for these miles. Total miles for the year on the van were 10,540. Danielle has her own car that she uses to and from work. Patrick bought the van on March 5, 2013. He used the standard mileage method in 2018. Patrick incurred no business-related parking or tolls in 2018.

Prepare the Beckmans' Form 1040 and accompanying Schedules C and SE, and Form 4562. Be sure to complete lines 30-36 on Form 4562. Neither Patrick nor Danielle want $3 to go to the Presidential election campaign fund. The Beckmans sign their return on April 15, 2019.

A note on the safe harbor method for Patrick's business use of the home: This is addressed on page 705.03 in Chapter 7. Patrick, for our purposes, will use the safe harbor and claim a deduction of $1100 on line 30 of his Schedule C. To do this, at the bottom of schedule C, at "simplified method files only" enter 1800 for the total square footage in your home and enter 220 for the square footage of the part of the home used for business. It will give you an 1100 deduction on line 30 of the completed schedule C.