Phillips full-time real estate business is named Phillip Dunphy Realty. His business is located at 645 Grove Street, Los Angeles, California 90018, and his employer identification number is 93-3488888. Phillips gross receipts during the year were $730,000. Phillip uses the cash method of accounting for his business. Phillips business expenses are as follows: 1)Advertising $ 5,000 2) Professional dues 800 3)Professional journals 200 4)Employee wages 48,000 5)Insurance on office contents 1,120 6) Accounting services 2,100 7)Miscellaneous office expense 500 8)Utilities and telephone 3,360 9)Payroll taxes 3,600 10)Depreciation ? to be calculated On March 20, Phillip moved his business out of the old offices at 1103 Allium Lane into a newly constructed and equipped office on Grove Street. Phillip sold the old office building and all its furnishings. Phillips expenditures for the new office building are as follows: Date equired Asset Cost 3/20 Land $ 300 000 3/20 Office bulding $ 2 500 000 3/20 Furniture $ 200 000 4/1 Computer system $ 350 000 6/1 Art works $ 150 000 Phillip computes his cost recovery allowance using MACRS. He would like to use the 179 immediate expensing, but he has elected to not claim any bonus depreciation. Phillip has never claimed 179 or bonus depreciation before. The assets Phillip sold on March 20 are as follows: Date Acquired Asset Sale price Original Cost Accumulated Depreciation as of beginning of the year 5/1/11 Office building $ 940 000 $ 900 000 $ 129 825 5/1/11 Land $ 200 000 $ 100 000 0 7/1/11 Furniture $ 50 000 $ 239 000 $ 206 998 8/13/13 Furniture $ 10 000 $ 324 000 $ 222 782 4/12/14 Office Equipment $100 000 $120 000 $ 67 524 5/13/15 Computers $30 000 $50 000 $ 10 000 Phillip has never sold any assets relating to his business before this transaction.

Phillip and Claire received $300 of interest from State Savings Bank on a joint account. They also received a qualified dividend of $395 on jointly owned stock in Xila Corporation.

The Philip and Claire Dunphy sold 60 shares of Fizbo Corporation common stock on September 3 for $65 a share (minus a $50 total commission). The Dunphy purchased the stock on November 8, 2016, for $90 a share. They also sold a painting for $13,000 on March 1. Claire purchased the painting for $20,050 on September 1, 2010, as an investment.

The Dunphys filed their 2016 federal, state, and local returns on April 13, 2017. They paid the following additional 2016 taxes with their returns: federal income taxes of $630, state income taxes of $250, and city income taxes of $75.

Use the following information to complete Phillip and Claire Dunphys 2017 federal income tax return, any required forms, and schedules.