Robert (Bob) S. and Sally D. Grove are husband and wife and live at 4112 Larkspur Lane, Denton, TX 76201. Bob is a retired petroleum engineer, and Sally is a portrait artist. 1. When he retired at age 65 in 2008, Bob was chief of offshore operations at Pelican Exploration Corporation. While employed, Bob participated in Pelican?s contributory qualified pension plan, to which he had contributed $250,000 (in after-tax dollars). Under one of the plan options, he chose a life-annuity payout of $60,000 per year over his life. Due to Bob?s expertise in Gulf of Mexico offshore operations, Pelican continues to use his services on a consulting basis (see item 3). 2. Sally, an accomplished artist, is well known regionally for her oil portraits. She paints in the Photorealism style, providing her clients with portraits that are often mistaken for photographs. Painting in this style is very time-consuming. Consequently, her output averages one portrait per month. Her fee of $3,200 per portrait, set several years ago, never varies. As this amount is quite reasonable for a Photorealistic oil portrait, she has a long waiting list of clients who have not yet been scheduled for sittings. She does all of her work in the studio the Groves maintain in their personal residence (see item 6). 3. During 2011, Bob made seven trips on behalf of Pelican. On a typical trip, Bob flies by commercial airline to New Orleans, Houston, or Corpus Christi and then takes a company helicopter to the offshore platform. If necessary, he rents a room at a local motel. Sometimes off-site consultations can solve the problem, and a trip to the rig is not necessary. His expenses for these trips are as follows: Airfare $5,100 Lodging 3,100 Meals 2,200 Ground transportation (taxis, limos, and rental cars) 750 After each trip, Bob recovers his expenses when he is paid by Pelican for the services rendered. Pelican does not require an accounting for the expenses and reimburses Bob based on his verbal report of how much he spent. 4. During 2011, Sally completed 14 portraits, 11 of which were delivered when payment was received. Two portraits were delivered but were not paid for until 2012. One portrait was commissioned by the CEO of a company that has since entered bankruptcy. Because the CEO has been indicted for securities fraud, Sally feels certain that she will not be paid for the work. In December, she accepted $3,200 as payment for a portrait to be done in 2012. Although she did not like the arrangement, the customer said that the prepayment was motivated by anticipated cash-flow considerations. In early January 2011, Sally was paid for three portraits she painted and delivered in 2010. 5. Sally keeps all of her receipts for expenses, but she does not classify them by category. Her total costs for painting supplies in 2011 were $3,010 (e.g., for canvases, brushes, oil paints, smocks, palettes, and other art supplies). The framing of the finished portrait is left to the customer because the most appropriate frame is a matter of personal taste, which depends on where the painting will be exhibited. 6. For convenience and security reasons, Sally prefers to work at home. The Groves had this in mind when they constructed their present residence. One-fourth of the 4,000 square-foot living area is devoted to Sally?s studio. The home was built at a cost of $350,000 on a lot previously acquired for $100,000, and they moved in on June 15, 2008. As to business use, depreciation has been based on MACRS (using the midmonth convention) applicable to 39-year nonresidential realty. Besides home mortgage interest and property taxes (see item 19), residence expenses for 2011 are summarized below. Utilities $4,200 Molly Maid cleaning service 2,800 Service fee for home security system 1,600 Removal of stains from studio flooring 1,100 Homeowner?s insurance 970 Repairs to studio skylight 340 7. While on a business trip to South Texas in 1999 to acquire some oil leases, Bob attended a mortgage foreclosure auction. At the auction (held on February 4, 1999), he acquired an abandoned sugarcane farm near Pearland, known as Broussard Place. Bob financed most of the $30,000 purchase through a local farm credit union. In view of the expansion trend in nearby Houston, he regarded the purchase as a good investment. Early in 2011, Bob was contacted by a Houston real estate developer who offered $250,000 for Broussard Place. Horrified at the prospect of a $220,000 taxable gain, Bob ultimately arranged for an exchange transaction by written notice on May 10. In exchange for several vacant lots on Padre Island, Texas, worth $240,000 and cash of $10,000, Bob transferred Broussard Place to the developer. The exchange took place at an attorney?s office in Houston on June 20, 2011. 8. On another business trip to South Texas, Bob purchased unimproved land near Nederland, Texas, for $18,200 at an estate sale held on April 17, 1986. Described as Block 46, the property was adjacent to a modest prison rice farm owned by the Texas Department of Corrections (TDC). Bob bought the property based on a hunch that the TDC might someday want to expand its Nederland prison facility. In late 2010, the TDC contacted Bob and offered him $140,000 for Block 46. After repeated threats of a condemnation proceeding, Bob transferred the property to the TDC on June 28, 2011, for $180,000. On December 17, 2011, Bob reinvested $175,000 in vacant land located near Texas State University in San Marcos. Bob does not plan to reinvest any more of the amount received from the TDC. 9. The Groves had always thought that taking extended road trips in an RV would be fun. Therefore, in June 2011, they bought a new Winnebago Deluxe Coach RVfor $106,250 [$100,000 (discounted list price) + $6,250 (state sales tax)]. Two weeks on the road was enough, however, and the road trip was over. In July 2011, they sold the RV to a neighbor for $90,000. The neighbor made a $20,000 cash down payment and paid the balance of $70,000 in early December 2011. No interest is provided for. 10. On May 9, 1997, Bob?s father gave him 400 shares of Carmine Corporation common stock as a birthday present. The stock had cost his father $16,000 ($40 a share) and was worth $20,000 on the date of the gift. In 2007, when the stock was worth $140 per share, Carmine declared a 2-for-1 stock split. On July 27, 2011, Bob sold 400 shares for $20,000 ($50 a share). For sentimental reasons (they were a gift from his father), Bob wanted to keep 400 shares. 11. On December 21, 2011, the Groves sold 500 shares of Flamingo Power common stock for $40,000 ($80 a share); the stock was purchased on February 1, 2011, for $50,000 ($100 a share). They wanted to generate a loss to offset some of the capital gain recognized during the year. Because the Groves considered the stock to be a good investment, they repurchased 500 shares of Flamingo on February 19, 2012, for $45,000 ($90 a share). 12. On March 2, 2009, Sally was contacted by Laura Turner, a former college roommate. Over lunch, Laura asked Sally for a loan of $6,000 to help finance a new venture. Because the venture, a summer art camp in Santa Fe, New Mexico, sounded interesting, Sally made the loan. Laura signed a note due in two years at 10% interest. In late 2011, Sally learned that Laura had disappeared after being charged with grand theft by New Mexico authorities. Even worse, Laura is wanted in Arkansas for parole violation from a prior felony conviction. Laura has never paid any interest on the note she gave Sally. 13. The Groves have a long-term capital loss carryover of $7,000 from 2010. 14. On May 9, 2007, Bob?s favorite uncle, Cornelius Grove, gave him the family antique gun collection. Based on family records and educated estimates, the collection had an adjusted basis to Cornelius of $4,200 and was worth $13,000 on the date of the gift. Because Sally abhors guns, Bob has been under heavy pressure to get rid of the collection. After Cornelius died in early 2011, Bob donated the collection to the Alamo Siege Museum (a qualified charity). The transfer was made on December 5, 2011; at that time, several qualified appraisers valued the collection at $16,000. The museum plans to add the collection to the other firearms it exhibits to visitors. 15. While walking the dog in late December 2010, Sally was hit by an out-of-control delivery truck. The mishap sent Sally to the hospital for several days of observation and medical evaluation. Aside from severe bruises, she suffered no permanent injury. Once apprehended, the driver of the truck was ticketed for DUI. The owner of the truck, a local distributor for a national brewery, was concerned about the adverse publicity that would result if Sally filed a lawsuit. Consequently, it paid all of her medical expenses and offered her a settlement if she would sign a release. Under the settlement, Sally would receive $134,000?$8,000 for loss of income and $126,000 for personal injury. On January 31, 2011, Sally signed the release and was immediately paid $134,000. 16. In August 2010, Bob was rear-ended while stopped for a red light. Because the driver who caused the accident left the scene, Bob was forced to use his insurance to repair the damage to his car. As a result, Bob was subject to the $1,000 deductible provision in the policy. In 2011, the insurance company (Falcon Casualty) located the driver at fault and recovered the amount paid for repairs. Consequently, in April 2011, Bob received a check from Falcon refunding the $1,000 deductible he had paid. The Groves did not claim any deduction as to the accident on their 2010 income tax return. 17. After an acrimonious divorce, the Groves?s only daughter (Pamela Jansen) moved back home in January 2011. She brought her twins (Saley and Samantha) with her. Pamela has no income for the year except the $4,200 she received for two months of child support. Under the divorce decree, Pamela was given custody of the children and was awarded child support of $2,100 a month. The decree does not indicate who is entitled to the dependency exemptions for the children. Pamela plans to initiate legal proceedings against her ex-husband for delinquent child support. 18. Besides the items already mentioned, the Groves have the following receipts for 2011: Social Security benefits (Bob, $12,000; Sally, $6,000) $18,000 Consulting income paid by Pelican (including expense reimbursement of $11,150?see item 3) 35,000 Life insurance proceeds (see below) 50,000 Qualified dividend income? Carmine Corporation 1,200 Flamingo Power 400 Interest income? IBM bonds 600 CD at First National Bank of Denton 400 Wells Fargo money market fund 300 City of Beaumont (TX) general purpose bonds 9,000 The life insurance proceeds concerned a policy owned by Cornelius Grove (see item 14), which named Bob as the beneficiary. The receipt of the proceeds came as a complete surprise to Bob as he never knew the policy existed. 19. Expenditures for 2011 not already mentioned are as follows: Payment of Pamela?s legal fees and court costs incident to her divorce $9,000 Medical? Medicare B insurance premiums 2,244 Dental implants for Sally 8,000 Taxes on personal residence 3,600 Interest on home mortgage 2,200 Church pledge 1,200 Professional journals? Oil- and gas-related (Bob) 160 Art-related (Sally) 120 Dues to professional organizations (Bob) 140 State professional license fee (Bob) 250 Tax return preparation fee (50%, equally divided between Bob and Sally relating to the tax reporting for each business and 50% relating to Bob and Sally?s personal income tax return) 900 Texas does not impose an income tax, so the Groves choose the state and local sales tax option. In addition to the state general sales tax, the local sales tax rate is 2% (1.5% city; 0.5% county). The Groves do not keep track of sales tax expenditures for routine purchases (e.g., clothes and prepared foods), but they can verify the sales tax on exceptional items (i.e., big-ticket purchases). 20. Relevant information for 2011 is provided below: 2010 tax refund applied toward 2011 income tax $ 800 Amount withheld by trustee of Bob?s retirement plan 6,500 Quarterly payments made to the IRS ($2,500 each payment) 10,000 Name Social Security Number Birth Date Robert S. Grove 123?45?6785 09/15/1943 Sally K. Grove 123?45?6786 12/03/1944 Pamela Jansen 123?45?6784 10/19/1983 Saley Jansen 123?45?6787 06/25/2008 Samantha Jansen 123?45?6788 06/25/2008 The business activity code for Bob is 541330, and for Sally, it is 711510. Requirements Prepare an income tax return (with appropriate schedules) for the Groves for 2011. In doing this, utilize the following guidelines: Make necessary assumptions for information not given in the problem but needed to complete the return. The taxpayers have the necessary substantiation (e.g., records and receipts) to support the transaction involved. If any refund is due, the Groves want it applied to next year?s tax liability.

Form 1040 2012 (99) Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return For the year Jan. 1-Dec. 31, 2012, or other tax year beginning OMB No. 1545-0074 , 2012, ending IRS Use OnlyDo not write or staple in this space. See separate instructions. , 20 Your first name and initial Last name Your social security number If a joint return, spouse's first name and initial Last name Spouse's social security number Apt. no. Home address (number and street). If you have a P.O. box, see instructions. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Foreign country name Filing Status Check only one box. Exemptions Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse Foreign province/state/county 1 4 Single Married filing jointly (even if only one had income) 2 3 c Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. Married filing separately. Enter spouse's SSN above and full name here. 6a b 5 Qualifying widow(er) with dependent child Yourself. If someone can claim you as a dependent, do not check box 6a . Spouse . Dependents: (1) First name . . . . . . . . . . . (2) Dependent's social security number Last name . . . . . . . . . . . . . . . . } (4) if child under age 17 qualifying for child tax credit (see instructions) (3) Dependent's relationship to you Dependents on 6c not entered above d Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. If you did not get a W-2, see instructions. Enclose, but do not attach, any payment. Also, please use Form 1040-V. Adjusted Gross Income Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions) If more than four dependents, see instructions and check here Income Make sure the SSN(s) above and on line 6c are correct. . . . . . . . . . . 8b . . . . . . . . . . . . . . . . 8a . . . . . . . 9a 10 11 Qualified dividends . . . . . . . . . . . 9b Taxable refunds, credits, or offsets of state and local income taxes Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 12 13 14 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 12 13 14 15a 16a 17 IRA distributions . 15a b Taxable amount . . . Pensions and annuities 16a b Taxable amount . . . Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 17 18 19 20a Farm income or (loss). Attach Schedule F . Unemployment compensation . . . . Social security benefits 20a 18 19 20b 21 22 Other income. List type and amount Combine the amounts in the far right column for lines 7 through 21. This is your total income 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 . 24 25 26 27 28 Moving expenses. Attach Form 3903 . . . . . . Deductible part of self-employment tax. Attach Schedule SE . Self-employed SEP, SIMPLE, and qualified plans . . 26 27 28 29 30 31a Self-employed health insurance deduction Penalty on early withdrawal of savings . . . . . . . . . . 32 33 34 Alimony paid b Recipient's SSN IRA deduction . . . . . . . Student loan interest deduction . . Tuition and fees. Attach Form 8917 . 29 30 31a . . . . . . . . . . . . 32 33 34 35 36 37 Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 . . . . . . . . . . . . . Subtract line 36 from line 22. This is your adjusted gross income 7 8a b 9a b Total number of exemptions claimed . . . . Wages, salaries, tips, etc. Attach Form(s) W-2 . Taxable interest. Attach Schedule B if required . Tax-exempt interest. Do not include on line 8a . Ordinary dividends. Attach Schedule B if required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b Taxable amount . . . . . . . . . . . . Add numbers on lines above 7 21 22 23 . . . For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. . . . . . . . . . 36 37 Cat. No. 11320B Form 1040 (2012) Page 2 Form 1040 (2012) Tax and Credits Standard Deduction for People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. All others: Single or Married filing separately, $5,950 Married filing jointly or Qualifying widow(er), $11,900 Head of household, $8,700 Other Taxes Payments If you have a qualifying child, attach Schedule EIC. 38 Amount from line 37 (adjusted gross income) 39a Check if: Sign Here Paid Preparer Use Only . You were born before January 2, 1948, Spouse was born before January 2, 1948, . . Blind. Blind. . } . . . . . 38 . Total boxes checked 39a 39b . . 42 43 Exemptions. Multiply $3,800 by the number on line 6d . . . . . . . . . . . . Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . Form 4972 c 962 election Tax (see instructions). Check if any from: a Form(s) 8814 b 44 45 46 Alternative minimum tax (see instructions). Attach Form 6251 . Add lines 44 and 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b . . . 8919 . . . . Foreign tax credit. Attach Form 1116 if required . Credit for child and dependent care expenses. Attach Form 2441 47 48 49 50 51 Education credits from Form 8863, line 19 . . . . . Retirement savings contributions credit. Attach Form 8880 Child tax credit. Attach Schedule 8812, if required . . . 49 50 51 52 53 54 55 Residential energy credits. Attach Form 5695 . . . . 52 3800 b 8801 c Other credits from Form: a 53 Add lines 47 through 53. These are your total credits . . . . . Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- 56 57 Self-employment tax. Attach Schedule SE . . . . Unreported social security and Medicare tax from Form: 58 59a b Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required Household employment taxes from Schedule H . . . . . . . a 4137 . . . . . . . . First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . . . . . . . . . . . . 69 Credit for federal tax on fuels. Attach Form 4136 . . . . 70 Credits from Form: a 2439 b Reserved c 8801 d 8885 71 Add lines 62, 63, 64a, and 65 through 71. These are your total payments . . . . . . . . Other taxes. Enter code(s) from instructions 62 63 Federal income tax withheld from Forms W-2 and 1099 . . 2012 estimated tax payments and amount applied from 2011 return 64a b Earned income credit (EIC) . . . . . . Nontaxable combat pay election 64b Additional child tax credit. Attach Schedule 8812 . Add lines 55 through 60. This is your total tax . . . . . . . . . . . . . American opportunity credit from Form 8863, line 8 . Reserved . . . . . . . . . . . . . Amount paid with request for extension to file . . . . . . . . . . . . 44 45 46 55 56 57 60 61 62 63 64a 65 66 67 68 Excess social security and tier 1 RRTA tax withheld 73 If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid 74a b d Amount of line 73 you want refunded to you. If Form 8888 is attached, check here . c Type: Routing number Checking Savings Account number Amount of line 73 you want applied to your 2013 estimated tax 75 Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions 75 76 43 58 59a 59b . . . 40 41 42 54 . . 60 61 65 66 . . . . 47 48 77 77 Estimated tax penalty (see instructions) . . . . . . . Do you want to allow another person to discuss this return with the IRS (see instructions)? Designee's name Phone no. 72 73 74a 76 Yes. Complete below. No Personal identification number (PIN) Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.) PTIN Check if self-employed Joint return? See instructions. Keep a copy for your records. . Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . Third Party Designee . 40 41 Direct deposit? See instructions. Amount You Owe . If your spouse itemizes on a separate return or you were a dual-status alien, check here b 67 68 69 70 71 72 Refund { . Print/Type preparer's name Firm's name Preparer's signature Date Firm's EIN Firm's address Phone no. Form 1040 (2012) SCHEDULE A (Form 1040) OMB No. 1545-0074 Itemized Deductions Department of the Treasury Internal Revenue Service (99) Information about Schedule A and its separate instructions is at www.irs.gov/form1040. Attach to Form 1040. Name(s) shown on Form 1040 Medical and Dental Expenses Taxes You Paid Interest You Paid Note. Your mortgage interest deduction may be limited (see instructions). Caution. Do not include expenses reimbursed or paid by others. Medical and dental expenses (see instructions) . . . . . 1 Enter amount from Form 1040, line 38 2 Multiply line 2 by 7.5% (.075) . . . . . . . . . . . 3 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . State and local (check only one box): a Income taxes, or . . . . . . . . . . . 5 b General sales taxes 6 Real estate taxes (see instructions) . . . . . . . . . 6 7 Personal property taxes . . . . . . . . . . . . . 7 8 Other taxes. List type and amount 8 9 Add lines 5 through 8 . . . . . . . . . . . . . . . . 10 Home mortgage interest and points reported to you on Form 1098 10 11 Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 1 2 3 4 5 . . . . . . 4 . . . . . . 9 . . . . . . 15 . . . . . . 19 . . . . . . 20 . . . . . 27 } 11 12 Points not reported to you on Form 1098. See instructions for special rules . . . . . . . . . . . . . . . . . 12 13 Mortgage insurance premiums (see instructions) . . . . . 13 14 Investment interest. Attach Form 4952 if required. (See instructions.) 14 15 Add lines 10 through 14 . . . . . . . . . . . . . . . Gifts to 16 Gifts by cash or check. If you made any gift of $250 or more, see instructions . . . . . . . . . . . . . . . . 16 Charity 17 Other than by cash or check. If any gift of $250 or more, see If you made a gift and got a instructions. You must attach Form 8283 if over $500 . . . 17 benefit for it, 18 Carryover from prior year . . . . . . . . . . . . 18 see instructions. 19 Add lines 16 through 18 . . . . . . . . . . . . . . . Casualty and Theft Losses 2012 Attachment Sequence No. 07 Your social security number 20 Casualty or theft loss(es). Attach Form 4684. (See instructions.) . . Job Expenses 21 Unreimbursed employee expensesjob travel, union dues, and Certain job education, etc. Attach Form 2106 or 2106-EZ if required. Miscellaneous 21 (See instructions.) Deductions 22 Tax preparation fees . . . . . . . . . . . . . 22 23 Other expensesinvestment, safe deposit box, etc. List type and amount Other Miscellaneous Deductions 24 25 26 27 28 23 Add lines 21 through 23 . . . . . . . . . . . . 24 Enter amount from Form 1040, line 38 25 Multiply line 25 by 2% (.02) . . . . . . . . . . . 26 Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . Otherfrom list in instructions. List type and amount 28 Total 29 Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40 . . . . . . . . . . . . . . . . . . . . . 29 Itemized Deductions 30 If you elect to itemize deductions even though they are less than your standard deduction, check here . . . . . . For Paperwork Reduction Act Notice, see Form 1040 instructions. . . . . . . . . . . Cat. No. 17145C . . . Schedule A (Form 1040) 2012 SCHEDULE B Department of the Treasury Internal Revenue Service (99) OMB No. 1545-0074 Interest and Ordinary Dividends (Form 1040A or 1040) Information Attach to Form 1040A or 1040. about Schedule B (Form 1040A or 1040) and its instructions is at www.irs.gov/form1040. Name(s) shown on return Part I 1 Interest Part II Amount List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see instructions on back and list this interest first. Also, show that buyer's social security number and address (See instructions on back and the instructions for Form 1040A, or Form 1040, line 8a.) Note. If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 2012 Attachment Sequence No. 08 Your social security number 1 2 3 Add the amounts on line 1 . . . . . . . . . . Excludable interest on series EE and I U.S. savings Attach Form 8815 . . . . . . . . . . . . . 4 Subtract line 3 from line 2. Enter the result here and 1040, line 8a . . . . . . . . . . . . . . Note. If line 4 is over $1,500, you must complete Part III. List name of payer 5 . . . . . . . . bonds issued after 1989. . . . . . . . . on Form 1040A, or Form . . . . . . . . 2 3 4 Amount Ordinary Dividends (See instructions on back and the instructions for Form 1040A, or Form 1040, line 9a.) Note. If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. Part III Foreign Accounts and Trusts (See instructions on back.) 5 6 Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 6 1040, line 9a . . . . . . . . . . . . . . . . . . . . . . Note. If line 6 is over $1,500, you must complete Part III. You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. 7a Yes No At any time during 2012, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . If \"Yes,\" are you required to file Form TD F 90-22.1 to report that financial interest or signature authority? See Form TD F 90-22.1 and its instructions for filing requirements and exceptions to those requirements . . . . . . . . . . . . . . . . . . . . . . . . . . b If you are required to file Form TD F 90-22.1, enter the name of the foreign country where the financial account is located 8 During 2012, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If \"Yes,\" you may have to file Form 3520. See instructions on back . . . . . . For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040A or 1040) 2012 Page 2 Schedule B (Form 1040A or 1040) 2012 General Instructions Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Schedule B (Form 1040A or 1040) and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form1040. Purpose of Form Use Schedule B if any of the following applies. You had over $1,500 of taxable interest or ordinary dividends. You received interest from a seller-financed mortgage and the buyer used the property as a personal residence. You have accrued interest from a bond. You are reporting original issue discount (OID) in an amount less than the amount shown on Form 1099-OID. You are reducing your interest income on a bond by the amount of amortizable bond premium. You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989. You received interest or ordinary dividends as a nominee. You had a financial interest in, or signature authority over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust. Part III of the schedule has questions about foreign accounts and trusts. Specific Instructions You can list more than one payer on each entry space for lines 1 and 5, but be sure to clearly show the amount paid next to the payer's name. Add the separate amounts paid by the payers listed on an entry space and enter the total in the \"Amount\" column. If you still need more space, attach separate statements that are the same size as the printed schedule. Use the same format as lines 1 and 5, but show your totals on Schedule B. Be sure to put your name and social security number (SSN) on the statements and attach them at the end of your return. TIP Part I. Interest Line 1. Report on line 1 all of your taxable interest. Taxable interest should be shown on your Forms 1099-INT, Forms 1099-OID, or substitute statements. Include interest from series EE, H, HH, and I U.S. savings bonds. List each payer's name and show the amount. Do not report on this line any tax-exempt interest from box 8 or box 9 of Form 1099-INT. Instead, report the amount from box 8 on line 8b of Form 1040A or 1040. If an amount is shown in box 9 of Form 1099-INT, you generally must report it on line 12 of Form 6251. See the Instructions for Form 6251 for more details. Seller-financed mortgages. If you sold your home or other property and the buyer used the property as a personal residence, list first any interest the buyer paid you on a mortgage or other form of seller financing. Be sure to show the buyer's name, address, and SSN. You must also let the buyer know your SSN. If you do not show the buyer's name, address, and SSN, or let the buyer know your SSN, you may have to pay a $50 penalty. Nominees. If you received a Form 1099-INT that includes interest you received as a nominee (that is, in your name, but the interest actually belongs to someone else), report the total on line 1. Do this even if you later distributed some or all of this income to others. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Below this subtotal, enter "Nominee Distribution" and show the total interest you received as a nominee. Subtract this amount from the subtotal and enter the result on line 2. If you received interest as a nominee, you must give the actual owner a Form 1099-INT unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-INT with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Forms 1099-INT and 1099-OID. TIP Accrued interest. When you buy bonds between interest payment dates and pay accrued interest to the seller, this interest is taxable to the seller. If you received a Form 1099 for interest as a purchaser of a bond with accrued interest, follow the rules earlier under Nominees to see how to report the accrued interest. But identify the amount to be subtracted as \"Accrued Interest.\" Original issue discount (OID). If you are reporting OID in an amount less than the amount shown on Form 1099-OID, follow the rules earlier under Nominees to see how to report the OID. But identify the amount to be subtracted as \"OID Adjustment.\" Amortizable bond premium. If you are reducing your interest income on a bond by the amount of amortizable bond premium, follow the rules earlier under Nominees to see how to report the interest. But identify the amount to be subtracted as \"ABP Adjustment.\" Line 3. If, during 2012, you cashed series EE or I U.S. savings bonds issued after 1989 and you paid qualified higher education expenses for yourself, your spouse, or your dependents, you may be able to exclude part or all of the interest on those bonds. See Form 8815 for details. Part II. Ordinary Dividends You may have to file Form 5471 if, in 2012, you were an officer or director of a foreign corporation. You may also have to file Form 5471 if, in 2012, you owned 10% or more of the total (a) value of a foreign corporation's stock, or (b) combined voting power of all classes of a foreign corporation's stock with voting rights. For details, see Form 5471 and its instructions. TIP Line 5. Report on line 5 all of your ordinary dividends. This amount should be shown in box 1a of your Forms 1099-DIV or substitute statements. List each payer's name and show the amount. Nominees. If you received a Form 1099-DIV that includes ordinary dividends you received as a nominee (that is, in your name, but the ordinary dividends actually belong to someone else), report the total on line 5. Do this even if you later distributed some or all of this income to others. Under your last entry on line 5, put a subtotal of all ordinary dividends listed on line 5. Below this subtotal, enter \"Nominee Distribution\" and show the total ordinary dividends you received as a nominee. Subtract this amount from the subtotal and enter the result on line 6. If you received dividends as a nominee, you must give the actual owner a Form 1099-DIV unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-DIV with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Form 1099-DIV. TIP Part III. Foreign Accounts and Trusts Regardless of whether you are required to file Form TD F 90-22.1 (FBAR), you may be required to file Form 8938, Statement of Specified Foreign Financial Assets, with your income tax return. Failure to file Form 8938 may result in penalties and extension of the statute of limitations. See www.irs.gov/form8938 for more information. TIP Line 7a-Question 1. Check the \"Yes\" box if at any time during 2012 you had a financial interest in or signature authority over a financial account located in a foreign country. See the definitions that follow. Check the \"Yes\" box even if you are not required to file Form TD F 90-22.1. Financial account. A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (that is, a fund that is available to the general public with a regular net asset value determination and regular redemptions). Financial account located in a foreign country. A financial account is located in a foreign country if the account is physically located outside of the United States. For example, an account maintained with a branch of a United States bank that is physically located outside of the United States is a foreign financial account. An account maintained with a branch of a foreign bank that is physically located in the United States is not a foreign financial account. Signature authority. Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account. See the Instructions for Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts) for exceptions. Do not consider the exceptions relating to signature authority in answering Question 1 on line 7a. Other definitions. For definitions of \"financial interest,\" \"United States,\" and other relevant terms, see the instructions for Form TD F 90-22.1. Note. You can get Form TD F 90-22.1 from the IRS website at www.irs.gov/pub/irs-pdf/f90221.pdf. Line 7a-Question 2. See Form TD F 90-22.1 and its instructions to determine whether you must file the form. Check the \"Yes\" box if you are required to file the form; check the "No" box if you are not required to file the form. If you checked the \"Yes\" box to Question 2 on line 7a, file Form TD F 90-22.1 with the Department of Treasury at the address shown in the instructions for that form. Do not attach Form TD F 90-22.1 to your tax return. To be considered timely, Form TD F 90-22.1 must be received by June 30, 2013. ! If you are required to file Form TD F 90-22.1 but do not properly do so, you may have to pay a civil penalty up to $10,000. A person who willfully fails to CAUTION report an account or provide account identifying information may be subject to a civil penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation. Willful violations may also be subject to criminal penalties. Line 7b. If you are required to file Form TD F 90-22.1, enter the name of the foreign country or countries in the space provided on line 7b. Attach a separate statement if you need more space. Line 8. If you received a distribution from a foreign trust, you must provide additional information. For this purpose, a loan of cash or marketable securities generally is considered to be a distribution. See Form 3520 for details. If you were the grantor of, or transferor to, a foreign trust that existed during 2012, you may have to file Form 3520. Do not attach Form 3520 to Form 1040. Instead, file it at the address shown in its instructions. If you were treated as the owner of a foreign trust under the grantor trust rules, you are also responsible for ensuring that the foreign trust files Form 3520-A. Form 3520-A is due on March 15, 2013, for a calendar year trust. See the instructions for Form 3520-A for more details. SCHEDULE C (Form 1040) Profit or Loss From Business OMB No. 1545-0074 2012 (Sole Proprietorship) For Department of the Treasury Internal Revenue Service (99) information on Schedule C and its instructions, go to www.irs.gov/schedulec. Attach Attachment Sequence No. 09 to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. Name of proprietor Social security number (SSN) A B Enter code from instructions Principal business or profession, including product or service (see instructions) C Business name. If no separate business name, leave blank. E Business address (including suite or room no.) F G H City, town or post office, state, and ZIP code Cash (2) Accrual (3) Other (specify) Accounting method: (1) Did you \"materially participate\" in the operation of this business during 2012? If \"No,\" see instructions for limit on losses If you started or acquired this business during 2012, check here . . . . . . . . . . . . . . . . . I J Did you make any payments in 2012 that would require you to file Form(s) 1099? (see instructions) . If "Yes," did you or will you file required Forms 1099? . . . . . . . . . . . . . . Part I D Employer ID number (EIN), (see instr.) Income . . . . . . . . 2 3 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the \"Statutory employee\" box on that form was checked . . . . . . . . . Returns and allowances (see instructions) . . . . . . . . . . . . . . . . . . . . Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 4 5 6 Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . . . . . . . 4 5 6 7 Gross income. Add lines 5 and 6 . . . 7 1 Part II Expenses 8 Advertising . 9 Car and truck expenses (see instructions) . . . . . Commissions and fees . 10 11 12 13 . . . . Contract labor (see instructions) Depletion . . . . . Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . . . . 14 Employee benefit programs (other than on line 19) . . Insurance (other than health) 15 16 8 9 10 11 12 13 . . . . . . . . . . . . . . . . . . Office expense (see instructions) 18 19 20 Pension and profit-sharing plans . Rent or lease (see instructions): Vehicles, machinery, and equipment 19 20a Other business property . . . Repairs and maintenance . . . Supplies (not included in Part III) . 20b 21 22 Taxes and licenses . . . . . Travel, meals, and entertainment: Travel . . . . . . . . . 23 24a 25 Deductible meals and entertainment (see instructions) . Utilities . . . . . . . . 24b 25 26 27a b Wages (less employment credits) . Other expenses (from line 48) . . Reserved for future use . . . 26 27a 27b a b 21 22 23 24 b 17 28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . 28 29 30 31 Tentative profit or (loss). Subtract line 28 from line 7 . . . . . . . . . . . . . . . . Expenses for business use of your home. Attach Form 8829. Do not report such expenses elsewhere . Net profit or (loss). Subtract line 30 from line 29. . . 29 30 . . . If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. 32 Yes Yes No No . . 2 3 18 a 17 No Enter expenses for business use of your home only on line 30. 14 15 16a 16b . . Yes 1 Interest: Mortgage (paid to banks, etc.) Other . . . . . . Legal and professional services a b . . . If you have a loss, check the box that describes your investment in this activity (see instructions). If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. If you checked 32b, you must attach Form 6198. Your loss may be limited. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11334P . } } 31 32a 32b All investment is at risk. Some investment is not at risk. Schedule C (Form 1040) 2012 Page 2 Schedule C (Form 1040) 2012 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If \"Yes,\" attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . a b Cost c Lower of cost or market Other (attach explanation) 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation . . . 35 36 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . 36 37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . 37 38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . 38 39 Other costs . . . . . . . . . . . . . . . . . . . . . . . . . 39 40 Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . 40 41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 41 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 . . . . . . 42 Part IV . . . Yes . Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. / / 43 When did you place your vehicle in service for business purposes? (month, day, year) 44 Of the total number of miles you drove your vehicle during 2012, enter the number of miles you used your vehicle for: a No b Commuting (see instructions) Business c Other Yes No 45 Was your vehicle available for personal use during off-duty hours? . . . . . . . . . . . . . . 46 Do you (or your spouse) have another vehicle available for personal use?. . . . . . . . . . . . . . Yes No 47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . Yes No If \"Yes,\" is the evidence written? . . . . . . . . . . . . . . . . . . . . Yes No b Part V 48 . . . . . . Other Expenses. List below business expenses not included on lines 8-26 or line 30. Total other expenses. Enter here and on line 27a . . . . . . . . . . . . . . . . 48 Schedule C (Form 1040) 2012 SCHEDULE D (Form 1040) Department of the Treasury Internal Revenue Service (99) OMB No. 1545-0074 Capital Gains and Losses Short-Term Capital Gains and LossesAssets Held One Year or Less Complete Form 8949 before completing line 1, 2, or 3. This form may be easier to complete if you round off cents to whole dollars. 1 Short-term totals from all Forms 8949 with checked in Part I . . . . . . . . . . 2 Short-term totals from all Forms 8949 with checked in Part I . . . . . . . . . . 3 Short-term totals from all Forms 8949 with checked in Part I . . . . . . . . . . box . . box . . box . . (d) Proceeds (sales price) from Form(s) 8949, Part I, line 2, column (d) (g) Adjustments to (e) Cost or other basis gain or loss from from Form(s) 8949, Part Form(s) 8949, Part I, I, line 2, column (e) line 2, column (g) (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) A . B . C . 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 . 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . 7 Net short-term capital gain or (loss). Combine lines 1 through 6 in column (h). If you have any longterm capital gains or losses, go to Part II below. Otherwise, go to Part III on the back . . . . . Part II Attachment Sequence No. 12 Your social security number Name(s) shown on return Part I 2012 Attach to Form 1040 or Form 1040NR. Information about Schedule D and its separate instructions is at www.irs.gov/form1040. Use Form 8949 to list your transactions for lines 1, 2, 3, 8, 9, and 10. 4 5 6 ( ) 7 Long-Term Capital Gains and LossesAssets Held More Than One Year Complete Form 8949 before completing line 8, 9, or 10. This form may be easier to complete if you round off cents to whole dollars. (d) Proceeds (sales price) from Form(s) 8949, Part II, line 4, column (d) Adjustments to (h) Gain or (loss) (e) Cost or other basis (g) gain or loss from Subtract column (e) from from Form(s) 8949, Part Form(s) 8949, Part II, column (d) and combine II, line 4, column (e) line 4, column (g) the result with column (g) 8 Long-term totals from all Forms 8949 with box A checked in Part II . . . . . . . . . . . . 9 Long-term totals from all Forms 8949 with box B checked in Part II . . . . . . . . . . . . 10 Long-term totals from all Forms 8949 with box C checked in Part II . . . . . . . . . . . . . 11 Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . . . . . . . . . . . . . . . . . . . 11 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 12 13 Capital gain distributions. See the instructions . . . . . . . . . . . . . . . . . . 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . 15 Net long-term capital gain or (loss). Combine lines 8 through 14 in column (h). Then go to Part III on the back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11338H 14 ( ) 15 Schedule D (Form 1040) 2012 Page 2 Schedule D (Form 1040) 2012 Part III 16 Summary Combine lines 7 and 15 and enter the result . . . . . . . . . . . . . . . . . . 16 If line 16 is a gain, enter the amount from line 16 on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 17 below. If line 16 is a loss, skip lines 17 through 20 below. Then go to line 21. Also be sure to complete line 22. If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 22. 17 Are lines 15 and 16 both gains? Yes. Go to line 18. No. Skip lines 18 through 21, and go to line 22. 18 Enter the amount, if any, from line 7 of the 28% Rate Gain Worksheet in the instructions 18 19 Enter the amount, if any, from line 18 of the Unrecaptured Section 1250 Gain Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 . . Are lines 18 and 19 both zero or blank? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). Do not complete lines 21 and 22 below. No. Complete the Schedule D Tax Worksheet in the instructions. Do not complete lines 21 and 22 below. 21 If line 16 is a loss, enter here and on Form 1040, line 13, or Form 1040NR, line 14, the smaller of: The loss on line 16 or ($3,000), or if married filing separately, ($1,500) } . . . . . . . . . . . . . . . 21 ( ) Note. When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040, line 9b, or Form 1040NR, line 10b? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). No. Complete the rest of Form 1040 or Form 1040NR. Schedule D (Form 1040) 2012 SCHEDULE SE (Form 1040) Department of the Treasury Internal Revenue Service (99) OMB No. 1545-0074 Self-Employment Tax 2012 Information about Schedule SE and its separate instructions is at www.irs.gov/form1040. Attach Attachment Sequence No. 17 to Form 1040 or Form 1040NR. Name of person with self-employment income (as shown on Form 1040) Social security number of person with self-employment income Before you begin: To determine if you must file Schedule SE, see the instructions. May I Use Short Schedule SE or Must I Use Long Schedule SE? Note. Use this flowchart only if you must file Schedule SE. If unsure, see Who Must File Schedule SE in the instructions. Did you receive wages or tips in 2012? No Yes Are you a minister, member of a religious order, or Christian Science practitioner who received IRS approval not to be taxed on earnings from these sources, but you owe self-employment tax on other earnings? Yes Was the total of your wages and tips subject to social security or railroad retirement (tier 1) tax plus your net earnings from self-employment more than $110,100? No Yes Did you receive tips subject to social security or Medicare tax that you did not report to your employer? Yes No No Did you receive church employee income (see instructions) reported on Form W-2 of $108.28 or more? No Are you using one of the optional methods to figure your net earnings (see instructions)? Yes Yes No Did you report any wages on Form 8919, Uncollected Social Security and Medicare Tax on Wages? Yes No You may use Short Schedule SE below You must use Long Schedule SE on page 2 Section AShort Schedule SE. Caution. Read above to see if you can use Short Schedule SE. 1a Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A . . . . . . . . . . . . . . . . . . . . . . . . b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code Y 2 3 4 5 6 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report . . . . . . . . . . . . . . Combine lines 1a, 1b, and 2 . . . . . . . . . . . . . . . . . . . . . Multiply line 3 by 92.35% (.9235). If less than $400, you do not owe self-employment tax; do not file this schedule unless you have an amount on line 1b . . . . . . . . . . . Note. If line 4 is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. Self-employment tax. If the amount on line 4 is: $110,100 or less, multiply line 4 by 13.3% (.133). Enter the result here and on Form 1040, line 56, or Form 1040NR, line 54 More than $110,100, multiply line 4 by 2.9% (.029). Then, add $11,450.40 to the result. Enter the total here and on Form 1040, line 56, or Form 1040NR, line 54 . . . . . . . Deduction for employer-equivalent portion of self-employment tax. If the amount on line 5 is: $14,643.30 or less, multiply line 5 by 57.51% (.5751) More than $14,643.30, multiply line 5 by 50% (.50) and add $1,100 to the result. Enter the result here and on Form 1040, line 27, or Form 1040NR, line 27 . . . . . . . . . . . . . . . 6 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11358Z 1a 1b ( ) 2 3 4 5 Schedule SE (Form 1040) 2012 Page 2 Schedule SE (Form 1040) 2012 Attachment Sequence No. 17 Name of person with self-employment income (as shown on Form 1040) Social security number of person with self-employment income Section BLong Schedule SE Part I Self-Employment Tax Note. If your only income subject to self-employment tax is church employee income, see instructions. Also see instructions for the definition of church employee income. A If you are a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361, but you had $400 or more of other net earnings from self-employment, check here and continue with Part I . . . . . . 1a Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), 1a box 14, code A. Note. Skip lines 1a and 1b if you use the farm optional method (see instructions) b If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code Y 1b ( 2 Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report. Note. Skip this line if you use the nonfarm optional method (see instructions) . . . . . . . . . . . . . . . . . . . . 3 4a Combine lines 1a, 1b, and 2 . . . . . . . . . . . . . . . . . . . . . . If line 3 is more than zero, multiply line 3 by 92.35% (.9235). Otherwise, enter amount from line 3 Note. If line 4a is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions. b If you elect one or both of the optional methods, enter the total of lines 15 and 17 here . . c Combine lines 4a and 4b. If less than $400, stop; you do not owe self-employment tax. Exception. If less than $400 and you had church employee income, enter -0- and continue 5a Enter your church employee income from Form W-2. See instructions for definition of church employee income . . . 5a b Multiply line 5a by 92.35% (.9235). If less than $100, enter -0- . . . . . . . . . . 6 Add lines 4c and 5b . . . . . . . . . . . . . . . . . . . . . . . . 7 Maximum amount of combined wages and self-employment earnings subject to social security tax or the 4.2% portion of the 5.65% railroad retirement (tier 1) tax for 2012 . . . . . . ) 2 3 4a 4b 4c 5b 6 7 110,100 00 4,520 00 8a Total social security wages and tips (total of boxes 3 and 7 on Form(s) W-2) and railroad retirement (tier 1) compensation. If $110,100 or more, skip lines 8b through 10, and go to line 11 8a b Unreported tips subject to social security tax (from Form 4137, line 10) 8b c Wages subject to social security tax (from Form 8919, line 10) 8c d Add lines 8a, 8b, and 8c . . . . . . . . . . . . . . . . . . . . . . . 9 Subtract line 8d from line 7. If zero or less, enter -0- here and on line 10 and go to line 11 . 10 Multiply the smaller of line 6 or line 9 by 10.4% (.104) . . . . . . . . . . . . . 11 Multiply line 6 by 2.9% (.029) . . . . . . . . . . . . . . . . . . . . . 12 Self-employment tax. Add lines 10 and 11. Enter here and on Form 1040, line 56, or Form 1040NR, line 54 13 Deduction for employer-equivalent portion of self-employment tax. Add the two following amounts. 59.6% (.596) of line 10. One-half of line 11. Enter the result here and on Form 1040, line 27, or Form 1040NR, line 27 . . . . . . . . . . . . . . . 13 Part II Optional Methods To Figure Net Earnings (see instructions) Farm Optional Method. You may use this method only if (a) your gross farm income1 was not more than $6,780, or (b) your net farm profits2 were less than $4,894. 14 Maximum income for optional methods . . . . . . . . . . . . . . . . . . 15 Enter the smaller of: two-thirds (2/3) of gross farm income1 (not less than zero) or $4,520. Also include this amount on line 4b above . . . . . . . . . . . . . . . . . . . Nonfarm Optional Method. You may use this method only if (a) your net nonfarm profits3 were less than $4,894 and also less than 72.189% of your gross nonfarm income,4 and (b) you had net earnings from self-employment of at least $400 in 2 of the prior 3 years. Caution. You may use this method no more than five times. 16 17 1 8d 9 10 11 12 Subtract line 15 from line 14 . . . . . . . . . . . . . . . . . . . . . Enter the smaller of: two-thirds (2/3) of gross nonfarm income4 (not less than zero) or the amount on line 16. Also include this amount on line 4b above . . . . . . . . . . From Sch. F, line 9, and Sch. K-1 (Form 1065), box 14, code B. 2 From Sch. F, line 34, and Sch. K-1 (Form 1065), box 14, code Aminus the amount you would have entered on line 1b had you not used the optional method. 14 15 . 16 . 17 3 From Sch. C, line 31; Sch. C-EZ, line 3; Sch. K-1 (Form 1065), box 14, code A; and Sch. K-1 (Form 1065-B), box 9, code J1. 4 From Sch. C, line 7; Sch. C-EZ, line 1; Sch. K-1 (Form 1065), box 14, code C; and Sch. K-1 (Form 1065-B), box 9, code J2. Schedule SE (Form 1040) 2012 Form 4797 Department of the Treasury Internal Revenue Service Sales of Business Property OMB No. 1545-0184 2012 (Also Involuntary Conversions and Recapture Amounts Under Sections 179 and 280F(b)(2)) Attach to your tax return. Information about Form 4797 and its separate instructions is at www.irs.gov/form4797. Enter the gross proceeds from sales or exchanges reported to you for 2012 on Form(s) 1099-B or 1099-S (or substitute statement) that you are including on line 2, 10, or 20 (see instructions) . . . . . . . . Part I 1 Sales or Exchanges of Property Used in a Trade or Business and Involuntary Conversions From Other Than Casualty or TheftMost Property Held More Than 1 Year (see instructions) (a) Description of property 2 27 Identifying number Name(s) shown on return 1 Attachment Sequence No. (c) Date sold (mo., day, yr.) (b) Date acquired (mo., day, yr.) (e) Depreciation allowed or allowable since acquisition (d) Gross sales price (f) Cost or other basis, plus improvements and expense of sale 3 4 5 Gain, if any, from Form 4684, line 39 . . . . . . . . . . . Section 1231 gain from installment sales from Form 6252, line 26 or 37 . Section 1231 gain or (loss) from like-kind exchanges from Form 8824 . 6 7 Gain, if any, from line 32, from other than casualty or theft. . . . . . . . . . . . . . . . . . Combine lines 2 through 6. Enter the gain or (loss) here and on the appropriate line as follows: . . . . . . . Partnerships (except electing large partnerships) and S corporations. Report the gain or (loss) following the instructions for Form 1065, Schedule K, line 10, or Form 1120S, Schedule K, line 9. Skip lines 8, 9, 11, and 12 below. Individuals, partners, S corporation shareholders, and all others. If line 7 is zero or a loss, enter the amount from line 7 on line 11 below and skip lines 8 and 9. If line 7 is a gain and you did not have any prior year section 1231 losses, or they were recaptured in an earlier year, enter the gain from line 7 as a long-term capital gain on the Schedule D filed with your return and skip lines 8, 9, 11, and 12 below. 6 7 8 Nonrecaptured net section 1231 losses from prior years (see instructions) . 8 9 Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, enter the gain from line 7 on line 12 below. If line 9 is more than zero, enter the amount from line 8 on line 12 below and enter the gain from line 9 as a long-term capital gain on the Schedule D filed with your return (see instructions) . . . . . . . . . . . . . . (g) Gain or (loss) Subtract (f) from the sum of (d) and (e) Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ordinary Gains and Losses (see instructions) 3 4 5 9 10 Ordinary gains and losses not included on lines 11 through 16 (include property held 1 year or less): 11 Loss, if any, from line 7 . . . . . . . . . . . . . . . . . . . 11 ( 12 13 14 Gain, if any, from line 7 or amount from line 8, if applicable Gain, if any, from line 31 . . . . . . . . . . Net gain or (loss) from Form 4684, lines 31 and 38a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 14 15 16 17 Ordinary gain from installment sales from Form 6252, line 25 or 36 . Ordinary gain or (loss) from like-kind exchanges from Form 8824. . Combine lines 10 through 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 17 18 For all except individual returns, enter the amount from line 17 on the appropriate line of your return and skip lines a and b below. For individual returns, complete lines a and b below: . . . . . . . . . a If the loss on line 11 includes a loss from Form 4684, line 35, column (b)(ii), enter that part of the loss here. Enter the part of the loss from income-producing property on Schedule A (Form 1040), line 28, and the part of the loss from property used as an employee on Schedule A (Form 1040), line 23. Identify as from \"Form 4797, line 18a.\" See instructions . . b Redetermine the gain or (loss) on line 17 excluding the loss, if any, on line 18a. Enter here and on Form 1040, line 14 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 13086I 18a 18b ) Form 4797 (2012) Page 2 Form 4797 (2012) Part III 19 Gain From Disposition of Property Under Sections 1245, 1250, 1252, 1254, and 1255 (see instructions) (b) Date acquired (mo., day, yr.) (c) Date sold (mo., day, yr.) Property C (a) Description of section 1245, 1250, 1252, 1254, or 1255 property: Property D A B C D These columns relate to the properties on lines 19A through 19D. 20 21 22 23 Gross sales price (Note: See line 1 before completing.) Cost or other basis plus expense of sale . . . . Depreciation (or depletion) allowed or allowable . . Adjusted basis. Subtract line 22 from line 21. . . . . . . Total gain. Subtract line 23 from line 20 . Property B 20 21 22 23 24 Property A 25 26 . . . 24 If section 1245 property: a Depreciation allowed or allowable from line 22 . b Enter the smaller