Please complete the 2022 federal income tax return for Melissa Murray. 1. Melissa Murray is single and has two children. (John and Mary). Melissa provides you with the following additional information: o Melissa lives at 430 South Michigan Avenue, Chicago, IL 60605. o Melissa's birthday is January 1, 1980. o John's birthday is March 1, 2010. o Mary's birthday is June 30, 2020. o Melissa's Social Security number is 007114727. o John's Social Security number is 005117232. o Mary's Social Security number is 004223419. 2. Melissa is employed at PwC as a Senior Audit Manager. Melissa's pay stubs indicate that she had $16,000 withheld in federal taxes, and $5,000 in state taxes withheld, as well as the appropriate Social Security and Medicare taxes. 3. Melissa earned salary of $100,000 before subtracting her 401(k) contributions. She contributed $10,000 to her 401(k) account. 4. In addition to the taxes withheld from her salary, Melissa also made 4 timely Federal and State payments of $1,000 per quarter for Federal and $250 per quarter for State. 5. PwC paid $1,000 of whole life insurance premiums to cover Melissa's personal whole life insurance policy. PwC also paid health club dues of $1,000 to a nearby health club on Melissa's behalf. 6. Taking advantage of PwC's educational assistance program, during the Fall semester Melissa enrolled in two graduate accounting classes at a local college. PwC paid her tuition, fees, and other course-related costs of $4,500. 7. Melissa manages the newly hired auditors for PwC. In recognition of her superior handling of the new hires Melissa was awarded the Employee of the Year Award. The cash award was $5,000. Page 2 8. On December 1, Melissa's mother died. From her mother's estate, she received stock valued at $50,000 (mother's basis was $15,000) and her mother's house valued at $200,000 (mother's basis in the house was $25,000). 9. Melissa owns several other investments and in January 2023 received a statement from her brokerage firm reporting the interest and dividends earned on the investments for 2022: This is important tax information and is being furnished to the Internal Revenue Service. 1099-DIV - Dividends and Distributions Entity Description Amount Amazon Ordinary dividends $2,000 1099-INT - Interest Entity Description Amount Village of Bolingbrook (bonds) Interest $700 Tesla Corporation Interest 1,000 State of Illinois (bonds) Interest 500 10. Melissa received a Form 1099-B from her broker for the sale of the following securities during 2022. The basis amounts were reported to the IRS. (Reminder: Long Term Capital Gains get a special rate.) 11. Melissa paid $9,000 in real estate taxes on her principal residence. The real estate tax is used to pay for town schools and other municipal services. 12. Melissa slipped in front of an ice rink last July. She broke her leg and was unable to work for two weeks. She incurred $3,000 in medical costs, all of which were paid by the ice rink, they gave her $2,000 for pain and suffering resulting from the injury, and two free skating lessons. 13. In addition, Melissa incurred the following unreimbursed medical costs: Optometrist $ 250 Emergency room charges $ 750 Chiropractor $ 550 Dentist $ 500 Doctor $ 800 Prescription drugs $ 450 Security Purchase Date Sales Date Sales Price Cost Basis IBM stock 6/30/2009 12/31/2022 $ 15,000 $ 6,000 Apple stock 1/1/2015 12/31/2022 $ 12,000 $ 11,000 Page 3 14. On March 1, Melissa took advantage of low interest rates and refinanced her $150,000 home mortgage with her original lender. Melissa purchased the home in 2018. The new home loan is for 10 years. She paid $500 in closing costs and $1,000 in discount points (prepaid interest) to obtain the loan. The house is worth $180,000 and Melissa's basis in the house is $90,000. As part of the refinancing arrangement, she also obtained a $18,000 home-equity loan. She used the proceeds from the homeequity loan to reduce the balance due on her credit cards. Melissa received several Form 1098 statements from her bank for interest paid by her in 2022. Details appear below: Primary home mortgage interest $8,500 Home-equity loan interest 750 Credit cards 537 Car loan 425 15. On March 11, 2022, Melissa contributed clothing to Goodwill. The original cost of the clothing was $900. She has substantiation valuing the donation at $450. The Salvation Army is located at 500 South Michigan, Chicago, IL 60605. In addition, she made the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: St. Jude Foundation $3,000 Judson Church $2,000 Animal Cruelty Society $500 Special Olympics $500 Professor Knutsen's Senate campaign $100 16. Melissa has rental property. The total monthly rent received from tenants is $2,000, and all lease agreements are for one year. The lease requires the tenant to pay a $1,000 security deposit. The security deposit is to be returned at the end of the lease if the property is in good condition. In July the air-conditioning went out. Melissa provides you with the following additional information for the rental in 2022: Property taxes $6,000 Insurance expense 3,000 Repairs 1,500 Depreciation 2,500 Page 4 17. Melissa prepares tax returns in the evening and on weekends (considered a business). She runs her business from a rental office at 123 Main Street, Chicago, IL 60605. The name of her business is Murray's Tax Preparation, and the federal identification number is 05-8799561. Her business code is 431216. Melissa has been operating in a business-like way since 2015 and has always shown a profit. She had the following income and expenses from her business: Revenues $50,000 Expenses: Advertising $ 2,000 Rent $12,000 Utilities $ 6,000 Office expenses $ 5,000 18. Melissa uses her 2020 Honda Accord in her business. During 2022, she properly documented 10,000 business miles. The total mileage on her car (i.e., for both business and personal use) during the year was 15,000 miles. Melissa elects to use the standard mileage method to calculate her car expenses. (For 2022, use $0.60 cents per mile.) She also spent $500 on tolls and $700 on parking related to the real estate business. (Separate from the mileage reimbursement.)