Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Unit 52B, Las Vegas, NV 89125. Skylar is self-employed and Walt is a high school teacher. Skylar’s Social Security number is 222-43-7690 and Walt’s is 700-01-0002. Walter’s birthdate is January 21, 1967, and Skylar’s is February 14, 1980. The Blacks provide all the support for Skylar’s mother, Rebecca Backin (Social Security number 411-66-2121), who lives in a nursing home in Reno, NV, and has no income.

Walter’s father, Alton Black (Social Security number 343-22-8899), lives with the Blacks in Las Vegas. Although Alton received Social Security benefits of $7,600 in 2022, the Blacks provide more than half of Alton’s support. If Rebecca or Alton qualify as dependents, Skylar and Walt can claim a $500 other dependent credit for each.

Walt’s earnings from teaching are included on the W-2 (see separate tab).

The Blacks moved from Maine to Nevada. As a result, they sold their house in Maine on January 4, 2022. They originally paid $80,000 for the home on July 3, 1996, but managed to sell it for $598,000. They spent $14,000 on improvements over the years.

The Blacks own a ski condo located at 123 Buncombe Lane, Brian Head, UT 84719. The condo was rented for 189 days during 2022 and used by the Blacks for 21 days. The rental activity does not rise to the level to qualify for the QBI deduction. Pertinent information about the condo rental is as follows:

Rental income	$25,000
Mortgage interest reported on Form 1098	12,000
Homeowners' association dues	4,200
Utilities	4,400
Maintenance	4,600
Depreciation (assume fully depreciated)	0

The above amounts do not reflect any allocation between rental and personal use of the condo. The Blacks are active managers of the condo.

Skylar runs a small car wash in Las Vegas as a sole proprietor. The business name is A1A Car Wash and is located at 4900 Cutler Ave NE, Las Vegas, NV 89146. The employer identification number is 19-3451234. She uses the cash method of accounting and does not track inventory of the sundries she sells (air fresheners, etc.). She therefore does not have beginning or ending inventories and recognizes the cost as supplies expense. The business code for a car wash is 811192. Her financial results for 2022 were as follows:

Revenues:
Car Wash	$32,000
Sundries	3,000
Total	$35,000
Expenses:
Payroll	$22,000
Utilities	2,000
Depreciation	0
Taxes	1,000
Licenses	300
Sundries cost	600
Insurance	900
Advertising	500
Total	$27,300
Net profit	$7,700

The business office at the car wash is not conducive to any type of work. It is basically a glorified broom closet. As a result, Skylar has a home office in their primary residence (which they rent). The office is 200 square feet in their 2,000 square foot home. They pay rent of $16,000 per year and their 2022 utilities are $1,200.

In 2018, Walter loaned his friend, Hank Shorter $5,000. In 2022, Hank declared bankruptcy and Walter is certain he will never get paid.

Walt is attending the Las Vegas Polytechnical University, pursuing a master’s degree in chemistry. His employer has an education assistance program that paid Walt $5,250 in 2022. His total 2022 tuition was $10,000. The remaining tuition was paid for through the Los Gatos Hermanos Foundation scholarship for adult learners.

Walter has been experimenting with a new candy formula in his garage chemistry lab. He has been working on a new blueberry flavor that tastes more like real blueberries. For the past few years, he has spent between $1,000 and $2,000 per year on this venture but has never made any money. In 2022, a bakery in town bought some of Walter’s formula for $700 to try a new blueberry muffin formula but did not purchase any additional formula after the first attempt. Walter spent $1,000 on lab supplies during 2022. Walter does not realistically expect to ever turn a profit, he just does not care for the existing artificial blueberry flavors.

Required:
Complete the Black’s federal tax return for 2022. Use Form 1040, Schedule 1, Schedule 2, Schedule C, Schedule D, Form 8949, Schedule E (page 1 only), Schedule SE, Form 8995, and Form 8829 to complete their tax return. Although the taxpayer is eligible for the Child or Other Dependent Tax Credit and Schedule 8812 is normally completed, we are giving you the amount to be entered directly on Form 1040.

• • Assume the taxpayers had health coverage for the entire year.
  • Neither taxpayers wants to contribute to the presidential election campaign.
  • If an amount box does not require an entry or the answer is zero, enter "0".
  • Do not round any percentages.
  • If required, round your answers to the nearest dollar.
  • If required, enter a "loss" as a negative number on the tax form. Do not enter deductions as negative numbers.