Tax Return Problem - complete return

(Forms available at: http://www.irs.gov/formspubs/ ) in order to complete tax return

Directions: Prepare 2016 federal income tax return, including all necessary schedules and attachments, for Barack and Michelle Obama using the following information:

Social Security Numbers: Barack- 123-45-6789, Michelle 333-222-111

Daughters Malia and Natasha ages 17 and 11, respectively- SS# 555-77-6666 and 555-77-6667. Michelle paid $6,000 in child care expenses for each child while she worked.

Salary: Barack - $30,000, Michelle $29,000

Malia and Natasha $600 each

Interest from Mellon Bank - $4,000, Interest on Illinois municipal bonds - $1,600

Dividends on IBM stock 4,000

Sold 1,000 shares of AOL stock for $6,000 on January 15, 2016. Shares were purchased on January 15, 1999 for $3,000.

Michelle had the following operating results from providing legal services, which she operated as a sole proprietorship:

Sales income - $12,000

Office supplies - 4,000

Advertising Expenses - 1,000

Business clothing 3,000

Barack and Michelle rented out the old family home in Chicago for the entire year:

Rental income - $12,000, Mortgage interest - $6,000

Depreciation - The house was purchased in 12/01/14 at a cost of $100,000 and is depreciated on a straight line basis over 27.5 years. Accumulated Depreciation from prior years was $3,651.

Mortgage interest on the white house owned by Barack and lived in by family - $4,000

Real Estate taxes on the white house - $2,000;

State income taxes withheld from Baracks wages - $3,000

Federal income taxes withheld from Baracks wages - $5,000

District of Columbia sales tax paid by Barack was $1,800.

State income tax refund of 2015 overpayment received in 2016 - $3,000 (2015 state income taxes were fully deductible on the 2014 tax return.)

Barack had $9,000 of business travel expenses, which were paid by his employer.

Michelle paid $4,000 in college tuition for graduate school and $400 for eyeglasses.

Barack contributed $2,000 to the United Way, and $3,000 to Harvard University during the year.

Michelle paid $3,000 of student loan interest.

Notes

1. Please make up any non-financial information needed to complete the tax return that is not provided above.

2. Use 2015 IRS tax return forms where 2016 forms are not yet available.