Personal Information provided by Sebastian to you for his Federal 2018 income tax return; Sebastian Wright, age 47, is single. He lives at 703 Blackbird Lane, Little Rock, AR 72205. His Social Security number is 111-22-9999. Sebastian does want $3 to go to the Presidential Election Campaign Fund. Sebastian's ex-wife, Abigail whose Social Security number is 111-55-7777, receives alimony in the amount of $12,000 per year. The alimony payments began in 2012 when their divorce was finalized and will continue for 10 years. She also receives $15,000 per year for child support. Included in the divorce decree is a Form 8332 waiver for all future tax years signed by Abigail Sebastian's son, Carter, who is age 18 and a student, resides with Sebastian. Carter's Social Security number is 222-99. 1111 Sebastian's daughter, Sophie, lives with him during the summer months when she is out of school. She is 12 years old and lives with her mother, Abigail, during the school year. Her Social Security number is 222.99-3333 Sebastian is self-employed and owns a sole proprietorship (that is not a specified service business) for which he uses the cash method of accounting. His revenues and expenses for 2018 are as follows: $740,000 405,000 Sales revenue Cost of goods sold (based on purchases for the year & no beginning or ending inventory) Salary expense Rent expense Utilities expense Telephone expense Advertising expense Depreciation expense Health insurance expense Accounting and legal fees expense Miscellaneous business expenses * $23,000 for employees and $8,000 for Sebastian. 88,000 30,000 8,000 6,500 4,000 21,000 31,000 7,000 1,000 Other income received by Sebastian includes the following: Dividend income qualified dividends): Walmart, Inc. Murphy, Inc. $10,000 2,000 Interest income: First National Bank Chase Bank City of Little Rock, AR bonds 11,000 2,000 17,000 Federal income tax refund from 2017 tax return 1,000 State income tax refund from 2017 tax return (Sebastian itemized deductions on his 2017 Federal tax return and included state income tax paid for 2017 of $2,000) 500 During the year, Sebastian had the following property transactions: a. Sold Netflix stock for $45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for $50,000. b. Received an inheritance of $300,000 from his uncle, Harry. Sebastian used $200,000 to purchase IBM, Inc. stock on May 15, 2018, and invested $100,000 in Amazon, Inc. stock on May 30, 2018 C. Received HubSpot, Inc. stock worth $9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was $5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012 Sebastian sold the stock on July 1, 2018, for $22,000. d. On July 15, 2018, Sebastian sold one-half of the IBM, Inc. stock for $40,000. e. Sales proceeds from two ATVs of $9,000 that Sebastian originally purchased for $14,000 in 2015. f. On December 1, 2018, Sebastian sold the condominium in which he had been living for the past 15 years (219 Airport Lane, Little Rock, AR 72208) and moved into a new residence. The sales price was $490,000, selling expenses were $28,500, and repair expenses related to the sale were $9,400. Sebastian purchased the condominium for $190,000. Sebastian's potential itemized deductions, exclusive of the aforementioned information, are as follows: $9,000 Medical expenses (not including health insurance premiums) Property taxes on residence State income taxes paid during the year Charitable contributions Mortgage interest on residence (First National Bank) Sales taxes paid during the year 5,800 5,000 10,000 9,900 3,500 During the year, Sebastian makes estimated Federal income tax payments of $30,000. Required: Compute in Excel or a compatible spreadsheet software, Sebastian's lowest net tax payable or refund due for 2018 using the Tax Formula Personal Information provided by Sebastian to you for his Federal 2018 income tax return; Sebastian Wright, age 47, is single. He lives at 703 Blackbird Lane, Little Rock, AR 72205. His Social Security number is 111-22-9999. Sebastian does want $3 to go to the Presidential Election Campaign Fund. Sebastian's ex-wife, Abigail whose Social Security number is 111-55-7777, receives alimony in the amount of $12,000 per year. The alimony payments began in 2012 when their divorce was finalized and will continue for 10 years. She also receives $15,000 per year for child support. Included in the divorce decree is a Form 8332 waiver for all future tax years signed by Abigail Sebastian's son, Carter, who is age 18 and a student, resides with Sebastian. Carter's Social Security number is 222-99. 1111 Sebastian's daughter, Sophie, lives with him during the summer months when she is out of school. She is 12 years old and lives with her mother, Abigail, during the school year. Her Social Security number is 222.99-3333 Sebastian is self-employed and owns a sole proprietorship (that is not a specified service business) for which he uses the cash method of accounting. His revenues and expenses for 2018 are as follows: $740,000 405,000 Sales revenue Cost of goods sold (based on purchases for the year & no beginning or ending inventory) Salary expense Rent expense Utilities expense Telephone expense Advertising expense Depreciation expense Health insurance expense Accounting and legal fees expense Miscellaneous business expenses * $23,000 for employees and $8,000 for Sebastian. 88,000 30,000 8,000 6,500 4,000 21,000 31,000 7,000 1,000 Other income received by Sebastian includes the following: Dividend income qualified dividends): Walmart, Inc. Murphy, Inc. $10,000 2,000 Interest income: First National Bank Chase Bank City of Little Rock, AR bonds 11,000 2,000 17,000 Federal income tax refund from 2017 tax return 1,000 State income tax refund from 2017 tax return (Sebastian itemized deductions on his 2017 Federal tax return and included state income tax paid for 2017 of $2,000) 500 During the year, Sebastian had the following property transactions: a. Sold Netflix stock for $45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for $50,000. b. Received an inheritance of $300,000 from his uncle, Harry. Sebastian used $200,000 to purchase IBM, Inc. stock on May 15, 2018, and invested $100,000 in Amazon, Inc. stock on May 30, 2018 C. Received HubSpot, Inc. stock worth $9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was $5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012 Sebastian sold the stock on July 1, 2018, for $22,000. d. On July 15, 2018, Sebastian sold one-half of the IBM, Inc. stock for $40,000. e. Sales proceeds from two ATVs of $9,000 that Sebastian originally purchased for $14,000 in 2015. f. On December 1, 2018, Sebastian sold the condominium in which he had been living for the past 15 years (219 Airport Lane, Little Rock, AR 72208) and moved into a new residence. The sales price was $490,000, selling expenses were $28,500, and repair expenses related to the sale were $9,400. Sebastian purchased the condominium for $190,000. Sebastian's potential itemized deductions, exclusive of the aforementioned information, are as follows: $9,000 Medical expenses (not including health insurance premiums) Property taxes on residence State income taxes paid during the year Charitable contributions Mortgage interest on residence (First National Bank) Sales taxes paid during the year 5,800 5,000 10,000 9,900 3,500 During the year, Sebastian makes estimated Federal income tax payments of $30,000. Required: Compute in Excel or a compatible spreadsheet software, Sebastian's lowest net tax payable or refund due for 2018 using the Tax Formula