TAX RETURN PROBLEM

The rental apartment building they own and actively manage, located at 1140 Farnsworth Avenue in Aurora, generates the following income and expenses:

Rental income of $70,000

Rental expenses excluding depreciation as follows:

Property insurance $15,600

Repairs and maintenance $ 6,500

Property taxes $15,700

Utilities $ 9,800

The apartment building was purchased in June of 2009 for $700,000. The cost of the land was estimated at 20 % of the total value.

Furniture for the apartment building office and lobby was purchased in March of 2010 for $50,000. Section 179 and additional first year bonus depreciation were NOT claimed in 2010.

None of the above expenses require the filing of a form 1099.

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Please use the approriate tax forms and fill in the amount on tax form 1040 from 2014

Form 1040 Schedule E (2014) and all other forms needed.

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Here are all the parts to the question I only need the part stated above answered:

Alan (45) and Julie (42) Fisher are married with 2 children (Jennifer K. and Jason D.) who qualify as their dependents. Jennifer was age 20 and Jason was age 12 at the end of 2014. Jennifer is a full-time student at Local University; she lives at home and commutes to school. The Fisher family lives at 1501 Maple St. in Wheaton, IL 60187. Alan works as a project manager and Julie is self-employed. They do not wish to contribute to the presidential election campaign fund. Relevant social security numbers are:

Alan: 342-55-6897

Julie: 389-14-5239

Jennifer: 378-66-8985

Jason: 320-21-7551

Alan received a Form W-2 from his employer (XYZ Electric Co.; West Chicago, IL; FEIN : 36-1723493) showing the following:

Federal Taxable Wages	$ 158,000
Federal Income Tax Withheld	$ 18,100
State Income Tax Withheld	$ 5,450

Note: Federal Taxable Wages are wages after deducting any pre-tax items.

Alan and Julie had the following items for 2014:

Insurance premiums for the Fisher family health insurance coverage totaled $21,450. Half of this amount was paid by Alans employer with the remainder being paid by Alan on a pre-tax basis through a salary reduction (cafeteria) plan.

Interest from First State Bank of $3,500. Alan and Julie have no foreign bank accounts and no interest in any foreign trusts.

Dividends of $12,000 as follows:

PepsiCo dividend of $5,900, all of which are qualified dividends

GM dividend of $3,780, all of which are qualified dividends

Dividend from Evergreen Total Return Mutual Fund of $2,320, of which $820 are qualified dividends

Non-business bad debt due to a loan to a friend of $5,000. Alan loaned the money to his friend on June 1, 2008. He discovered that his friend declared bankruptcy on September 8, 2014.

Stock from Bolling Drill Corporation was sold on June 1, 2014 for $140,000. The stock was acquired on September 1, 2010 for $188,000. This stock qualifies as Section 1244 stock.

On November 10, 2014, they sold 1,000 shares of Dotcom stock for $1,925. They had purchased the Dotcom stock the previous year on October 2 for $2,900. On September 12, 2014, they sold 800 shares of Microserf stock for $4,000. They had purchased the Microserf stock on April 22, 2010, for $3,050. The proceeds from these sales were reported on the Form 1099-B they received from their broker but basis was not reported.

The rental apartment building they own and actively manage, located at 1140 Farnsworth Avenue in Aurora, generates the following income and expenses:

Rental income of $70,000

Rental expenses excluding depreciation as follows:

Property insurance $15,600

Repairs and maintenance $ 6,500

Property taxes $15,700

Utilities $ 9,800

The apartment building was purchased in June of 2009 for $700,000. The cost of the land was estimated at 20 % of the total value.

Furniture for the apartment building office and lobby was purchased in March of 2010 for $50,000. Section 179 and additional first year bonus depreciation were NOT claimed in 2010.

None of the above expenses require the filing of a form 1099.

The Fishers personal use ski boat was destroyed in a boating accident on August 10, 2014. The boat cost $20,000 when the Fishers purchased it on May 19, 2009 and had a fair market value of $14,000 at the time of the accident. This loss is not covered by insurance.

Julie is a freelance writer and she calls her business Writing on the Side. Julie is a cash basis taxpayer. Her business office is located at 120 N. Main St., Wheaton, IL 60187

Julie had the following income and expense items associated with her business:

Income from sale of articles: $143,000

Rent on her office space: $21,900

Office utilities: $8,300

Office supplies: $5,450

Liability insurance for her business: $9,880

Business meals while travelling on company business: $4,500

Other business travel expenses: $6,000

None of these expenses require the filing of a form 1099.

Julie purchased and placed in service the following new fixed assets for her business:

Office Furniture and fixtures costing $40,000 on January 10, 2014

Computer equipment costing $20,000 on March 28, 2014

Automobile (2014 BMW) costing $39,000 on January 5, 2014. Total business mileage for the year was 8,400 (70% for business use). Total mileage for the year was 12,000. Julie will use the actual cost method for the auto. She will not elect Section 179 for the auto. Additional expenses of operating the car for the entire year are as follows:

Gasoline: $3,650

Repairs and Maintenance: $570

Comprehensive insurance coverage premiums: $1,160

Alan and Julie would like to maximize all potential deductions as soon as possible, except where indicated above.

Julie contributed $2,000 to a traditional individual retirement account on March 18, 2015. This is the first time she has contributed to an IRA.

Alan and Julie paid $8,000 for Jennifers tuition and $750 for books while she attended Local University where she is a sophomore and a full-time student.

They also paid the following during the year:

State income taxes withheld from Alans pay, per his W-2, above: $5,450 (which was greater than the state sales tax deduction would be).

Medical expenses, not including insurance premiums: $18,000

Home mortgage interest at Chase Bank, reported on Form 1098: $13,270.

Property taxes on home: $9,930

Charitable contributions in cash: $4,460

Fees for preparing last years tax return of $350 were paid in April of 2014

Safe deposit box rental : $75 (for storage of investment documents)

Fees for the management of taxable investments: $2,700

If they have a refund, the Fishers want to have it direct deposited to their savings account at First State Bank, account number 12345678 and routing number 987654321.