Required Using the information provided, prepare the 2018 federal tax return for Cal and Evann Malec The forms that need to be filled in are as follows Form 1040 Schedules 1, 3, 4, and 5 Schedules A, B, C, D, and E Form 8949, Form 4562 (2 one for DogWalker and one for rental) and Form 8863 Schedule SE (2 One for Cal and one For Evann) Helpful worksheets from Form 1040 instructions on page 40, 37, 96, and 7 The forms, schedules, and instructions can be found at the IRS website (www irs gov) The instructions can be helpful in completing the return and identifying the appropriate tax forms Facts Cal A and Evann M Malec are married and file a joint return Cal is self employed as a professional dog walker and Evann is a college science professor Cal and Evann have three children The oldest is Chase, who lives at home Chase is a full time nursing student at the University of Nebraska and worked part time during the year earning $1,500, which he spent for his own support Cal and Evann provided $6,000 towards Chase support (including $4,000 for fall tuition) They also provided over half the support of their daughter, Alexis, who is a full time student at the University of Nebraska Alexis lived at home until she was married in December of 2018 She filed a joint return with her husband, Darin, who earned $40,000 during the year Becky is the youngest and lived with Cal and Evann for the entire year The Malecs provide you with the following additional information The Malecs do not want to contribute to the presidential election campaign The Malecs live at 6910 NW 3rd Street Lincoln, Nebraska 68521 Cals birthday is 8 15 1958 and his social security number is 444 56 7777 Evanns birthday is 12 16 1961 and her social security number is 655 77 8889 Chases birthday is 5 28 1996 and his social security number is 576 20 2879 Alexiss birthday is 5 1 1998 and her social security number is 575 29 2143 Beckys birthday is 5 15 2004 and his social security number is 643 92 4685 The Malecs do not have a foreign bank account or trusts Evann is a lecturer at the University of Nebraska in Lincoln, where she earned $60,000 The university withheld federal income tax of $6,425, state income tax of $2,550, Social Security tax of $3,720, and Medicare tax of $870 She also worked part time for Spreetail Spreetail paid her $10,000 in salary, and withheld federal income tax of $1,124, state income tax of $425, Social Security tax of $620, and Medicare tax of $145 The Malecs received $800 of interest from Wells Fargo on a joint account They received $900 interest on the City of New York bonds they purchased in January with the proceeds from a loan from Union Bank They paid interest of $1,100 on the loan Cal received a dividend of $640 on Walmart, Inc stock he owns Evann received a dividend of $1,580 on Facebook, Inc stock she owns Cal and Evann received a dividend of $865 on jointly owned stock in Target, Inc All of these dividends are qualified dividends The Malecs have qualified educational loan interest expense of $2,800 in 2018 The Malecs filed their 2017 federal and state tax returns on April 13, 2018 They paid the following additional 2017 taxes with their returns Federal income taxes of $680 and state income taxes of $330 The Malecs made timely estimated federal income tax payments of $1,600 each quarter during 2018 They also made estimated state income taxes of $470 each quarter The Malecs made the federal and state fourth quarter estimated tax payments on December 31, 2018 They would like to receive a refund for any 2018 overpayment of tax Evann received a 2018 K 1 from the McBride Partnership interest she purchased two years ago Evann materially participates in the partnership A copy of the K 1 is included in the assignment information in Canvas The Malecs had the following activity in their brokerage account during the year (all transactions were reported on Form 1099 B Basis information on each stock sale was reported to the IRS) Sold 75 shares of Apple, Inc 4 15 18 $28,750 Sold 350 shares of Cooper Tire 10 14 18 $14,700 Relevant tax basis holding period information related to sales of securities in the current year Purchased 200 shares of Apple, Inc on 3 8 15 for 90,000 Purchased 300 shares of Cooper Tire on 1 12 14 for 19,000 Purchased 50 shares of Cooper Tire on 6 28 18 for 2,000 The Malecs have a $5,000 long term capital loss carryover from the prior tax year Cal and Evann have also provided the following information for 2018 Prescription medicine and drugs (net of insurance reimbursement) $376 Doctor and hospital bills (net of insurance reimbursement) 2,468 Penalty for underpayment of last years state income tax 15 Real estate taxes on personal residence 4,762 Interest on home mortgage (paid to First State Bank) The amount of the loan acquisition debt is $400,000 8,250 Interest on credit cards (vacation and consumer purchases) 595 Cash contribution to First Star Church 3,230 Professional dues (Evann) 325 Professional subscriptions (Evann) 245 Fee for preparation of 2017 tax return paid on April 12, 2018 500 Cal practices under the name Cal A Malec, DogWalker His business is located at 2412 Parkhaus Ave , Lincoln, NE 68521, and the employer identification number for the business is 01 2233445 Cals gross receipts for the year were $120,000 Cal uses the cash method of accounting for his business Cals business expenses for 2018 are as follows Advertising $1,200 Professional dues 490 Contributions to employee benefit plans 2,000 Insurance 3,200 Fine for overbilling a client 5,000 Insurance of office contents 720 Interest on money borrowed to refurbish office 600 Accounting services 2,100 Miscellaneous office expense 388 Building rent for 2018 12,000 Meals Entertainment (all meals in 2018) 200 Office kennel supplies 7,672 Utilities and telephone 3,260 Wages 30,000 Payroll taxes 2,400 In June, Cal decided to refurbish his office and kennel area This project was completed and the assets were placed in service on July 1, 2018 Phils expenditures included $18,000 for new kennels for boarding animals and $2,200 for a computer Cal does not want to immediately expense any of the assets purchased, or elect to expense under 179 Cal also does not want to claim any bonus depreciation (Election statement to elect out of bonus depreciation is available in Canvas Print it out and attach it to the return ) Cal wants to compute his cost recovery allowance under MACRS All of the business assets are used 100 for business Business assets purchased before 2018 have been fully depreciated in years prior to 2018 The unadjusted basis of all qualified property for purposes of 199A (Qualified Business Income Deduction) is $46,000 Evanns mother, Joseline, died on July 1, 2011, leaving Evann her entire estate Included in the estate was Joselines residence (515 Goodwill, Lincoln, NE 68508) Joselines basis in the residence was $50,000 The fair market value of the residence on July 1, 2011 was $160,000 The property was distributed from the estate to Evann on January 1, 2012 From January 1, 2012 until June 30, 2018, they rented the house to the same tenant The tenant was transferred to another city for work and moved out of the house on June 30, 2018 Cal and Evann have been managing the rental property themselves Since they did not want to bother finding another tenant, they sold the house on June 30, 2018 Information regarding the sale of the rental house will be provided in the Tax Return 3 assignment (Dont worry about the tax treatment of the sale of the rental house it is reported on Form 4797, but you do not have to do it for this project as information regarding the sale is not given Just use the date of the sale when you calculate the depreciation ) In 2018, Malecs collected rent of $1,800 a month for the months the house was rented during the year They incurred the following expenses related to the rental in 2018 Property insurance $600 Property taxes 800 Maintenance 475 Depreciation (to be completed) They have depreciated the house using MACRS rules and conventions applicable to residential rental real estate To compute depreciation on the house, the Malecs had allocated $15,000 of the propertys basis to the land The Malecs sold a painting on July 12, 2018 for $14,000 The Malecs had received the painting from Cals great uncle as a wedding present on June 25, 1980 Cals great uncle originally purchased the painting for $2,000 on January 1, 1968 The painting was valued at $25,000 on the date of the gift No gift tax was due, or paid, on the gift The Malecs decided to donate $6,000 in cash from the sale of the painting to the local art museum, which is a qualified charitable organization Total Gross Income from line 6 of Form 1040 Adjusted Gross Income from line 7 of Form 1040 Itemized Deductions or Standard Deduction from line 8 of Form 1040 Taxable Income from line 10 of Form 1040 Tax from line 11 of Form 1040 (attach tax computation) Total tax from line 15 of Form 1040 Line 19 Overpayment or line 22 Amount Due, as applicable

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Required: Using the information provided, prepare the 2018 federal tax return for Cal and Evann Malec. The forms that need to be filled in are

Required:

Using the information provided, prepare the 2018 federal tax return for Cal and Evann Malec. The forms that need to be filled in are as follows:
- Form 1040
- Schedules 1, 3, 4, and 5
- Schedules A, B, C, D, and E
- Form 8949, Form 4562 (2 - one for DogWalker and one for rental) and Form 8863
- Schedule SE (2 - One for Cal and one For Evann)
- Helpful worksheets from Form 1040 instructions on page 40, 37, 96, and 7
The forms, schedules, and instructions can be found at the IRS website (www.irs.gov). The instructions can be helpful in completing the return and identifying the appropriate tax forms.

Facts:

Cal A. and Evann M. Malec are married and file a joint return. Cal is self-employed as a professional dog walker and Evann is a college science professor. Cal and Evann have three children. The oldest is Chase, who lives at home. Chase is a full-time nursing student at the University of Nebraska and worked part time during the year earning $1,500, which he spent for his own support. Cal and Evann provided $6,000 towards Chase support (including $4,000 for fall tuition). They also provided over half the support of their daughter, Alexis, who is a full-time student at the University of Nebraska. Alexis lived at home until she was married in December of 2018. She filed a joint return with her husband, Darin, who earned $40,000 during the year. Becky is the youngest and lived with Cal and Evann for the entire year. The Malecs provide you with the following additional information:

The Malecs do not want to contribute to the presidential election campaign
The Malecs live at 6910 NW 3rd Street Lincoln, Nebraska 68521
Cals birthday is 8/15/1958 and his social security number is 444-56-7777
Evanns birthday is 12/16/1961 and her social security number is 655-77-8889
Chases birthday is 5/28/1996 and his social security number is 576-20-2879
Alexiss birthday is 5/1/1998 and her social security number is 575-29-2143
Beckys birthday is 5/15/2004 and his social security number is 643-92-4685
The Malecs do not have a foreign bank account or trusts

Evann is a lecturer at the University of Nebraska in Lincoln, where she earned $60,000. The university withheld federal income tax of $6,425, state income tax of $2,550, Social Security tax of $3,720, and Medicare tax of $870. She also worked part time for Spreetail. Spreetail paid her $10,000 in salary, and withheld federal income tax of $1,124, state income tax of $425, Social Security tax of $620, and Medicare tax of $145.

The Malecs received $800 of interest from Wells Fargo on a joint account. They received $900 interest on the City of New York bonds they purchased in January with the proceeds from a loan from Union Bank. They paid interest of $1,100 on the loan. Cal received a dividend of $640 on Walmart, Inc. stock he owns. Evann received a dividend of $1,580 on Facebook, Inc. stock she owns. Cal and Evann received a dividend of $865 on jointly owned stock in Target, Inc. All of these dividends are qualified dividends.

The Malecs have qualified educational loan interest expense of $2,800 in 2018.

The Malecs filed their 2017 federal and state tax returns on April 13, 2018. They paid the following additional 2017 taxes with their returns: Federal income taxes of $680 and state income taxes of $330.

The Malecs made timely estimated federal income tax payments of $1,600 each quarter during 2018. They also made estimated state income taxes of $470 each quarter. The Malecs made the federal and state fourth quarter estimated tax payments on December 31, 2018. They would like to receive a refund for any 2018 overpayment of tax.

Evann received a 2018 K-1 from the McBride Partnership interest she purchased two years ago. Evann materially participates in the partnership. A copy of the K-1 is included in the assignment information in Canvas.

The Malecs had the following activity in their brokerage account during the year (all transactions were reported on Form 1099-B. Basis information on each stock sale was reported to the IRS):

Sold 75 shares of Apple, Inc 4/15/18 $28,750

Sold 350 shares of Cooper Tire 10/14/18 $14,700

Relevant tax basis/holding period information related to sales of securities in the current year:

Purchased 200 shares of Apple, Inc on 3/8/15 for 90,000

Purchased 300 shares of Cooper Tire on 1/12/14 for 19,000

Purchased 50 shares of Cooper Tire on 6/28/18 for 2,000

The Malecs have a $5,000 long-term capital loss carryover from the prior tax year.

Cal and Evann have also provided the following information for 2018:

Prescription medicine and drugs (net of insurance reimbursement)	$376
Doctor and hospital bills (net of insurance reimbursement)	2,468
Penalty for underpayment of last years state income tax	15
Real estate taxes on personal residence	4,762
Interest on home mortgage (paid to First State Bank) The amount of the loan acquisition debt is $400,000	8,250
Interest on credit cards (vacation and consumer purchases)	595
Cash contribution to First Star Church	3,230
Professional dues (Evann)	325
Professional subscriptions (Evann)	245
Fee for preparation of 2017 tax return paid on April 12, 2018	500

Cal practices under the name Cal A. Malec, DogWalker. His business is located at 2412 Parkhaus Ave., Lincoln, NE 68521, and the employer identification number for the business is 01-2233445. Cals gross receipts for the year were $120,000. Cal uses the cash method of accounting for his business. Cals business expenses for 2018 are as follows:

Advertising	$1,200
Professional dues	490
Contributions to employee benefit plans	2,000
Insurance	3,200
Fine for overbilling a client	5,000
Insurance of office contents	720
Interest on money borrowed to refurbish office	600
Accounting services	2,100
Miscellaneous office expense	388
Building rent for 2018	12,000

Meals & Entertainment (all meals in 2018)	200
Office & kennel supplies	7,672
Utilities and telephone	3,260
Wages	30,000
Payroll taxes	2,400

In June, Cal decided to refurbish his office and kennel area. This project was completed and the assets were placed in service on July 1, 2018. Phils expenditures included $18,000 for new kennels for boarding animals and $2,200 for a computer. Cal does not want to immediately expense any of the assets purchased, or elect to expense under 179. Cal also does not want to claim any bonus depreciation. (Election statement to elect out of bonus depreciation is available in Canvas. Print it out and attach it to the return.) Cal wants to compute his cost recovery allowance under MACRS. All of the business assets are used 100% for business. Business assets purchased before 2018 have been fully depreciated in years prior to 2018.

The unadjusted basis of all qualified property for purposes of 199A (Qualified Business Income Deduction) is $46,000.

Evanns mother, Joseline, died on July 1, 2011, leaving Evann her entire estate. Included in the estate was Joselines residence (515 Goodwill, Lincoln, NE 68508). Joselines basis in the residence was $50,000. The fair market value of the residence on July 1, 2011 was $160,000. The property was distributed from the estate to Evann on January 1, 2012. From January 1, 2012 until June 30, 2018, they rented the house to the same tenant. The tenant was transferred to another city for work and moved out of the house on June 30, 2018. Cal and Evann have been managing the rental property themselves. Since they did not want to bother finding another tenant, they sold the house on June 30, 2018. Information regarding the sale of the rental house will be provided in the Tax Return 3 assignment. (Dont worry about the tax treatment of the sale of the rental house it is reported on Form 4797, but you do not have to do it for this project as information regarding the sale is not given. Just use the date of the sale when you calculate the depreciation.)

In 2018, Malecs collected rent of $1,800 a month for the months the house was rented during the year. They incurred the following expenses related to the rental in 2018:

Property insurance	$600
Property taxes	800
Maintenance	475
Depreciation (to be completed)	?

They have depreciated the house using MACRS rules and conventions applicable to residential rental real estate. To compute depreciation on the house, the Malecs had allocated $15,000 of the propertys basis to the land.

The Malecs sold a painting on July 12, 2018 for $14,000. The Malecs had received the painting from Cals great uncle as a wedding present on June 25, 1980. Cals great uncle originally purchased the painting for $2,000 on January 1, 1968. The painting was valued at $25,000 on the date of the gift. No gift tax was due, or paid, on the gift.