The following document is required for submission:

Manual calculation on the excel spreadsheet

Use the following information to complete Phillip and Claire Dunphy's 2022 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Ignore the alternative minimum tax for this problem.

Fact:

Gary Holstrum (SSN: 222-33-4444; DOB: 04/01/1975) and his wife Karen Holstrum (SSN: 555- 66-7777; DOB: 09/03/1975) have two children; Antonio (SSN: 888-99-7777; DOB: 02/04/2001) and Georgiana (SSN: 222-55-4444; DOB: 02/07/2003). Both Antonio and Georgiana are full- time students and qualify as federal income tax dependents of Gary and Karen. They live at: 1234 Canal Blvd, Thibodaux, LA 70301. Karen is a seventh-grade English teacher at the local middle school. Gary has his own manufacturing business.

Gary's business, Kool Beads, is an unincorporated manufacturer of Mardi Gras beads. The factory is located at 1003 LaPlace Avenue, New Orleans, LA 34455. Gary uses the accrual method of accounting in his business. He has the following transactions during the 2022 year:

Sales (less sales returns and allowances) $1,075,712

Purchases 600,000

Direct factory labor 175,000

Utilities 10,000

Insurance 60,000

Office Expenses 7,000

Administrative Salary Expenses 45,000 Legal Services 5,000

Travel Expenses (4,000 entertainment exp.) 20,000

Maintenance 18,000

Gary's estimated taxes paid in 2022 include: $6,400 for federal income taxes each quarter and $1,600 for state income taxes each quarter.

Karen Holstrum's salary for 2022 was $54,712. She had $6,600 withheld for federal income taxes and $1,750 withheld for Louisiana state income taxes. The entire family is covered under health insurance through Karen's job. The cost of the insurance is included in the total cost of medical bills listed below.

2022. Kool's depreciation schedule is as follows: 1. Purchased $40,000 of office furniture and equipment held for business use on March 4 , 2022. The assets have a 7-year life. Gary wants to maximize the current year deduction by taking the bonus depreciation. 2. Depreciation on recovery property acquired and placed into service: Gary did not elect a Section 179 deduction for any of the assets above, nor did he take advantage of the depreciation bonus. Gary and Karen's personal expenses for the year are as follows: Gary also donated 100 shares of QRS stock to the State University with a FMV of $9,500, on June 16, 2022. The stock was purchased in 2014 when the value was $1,500. QRS is a publicly traded stock. Gary and Karen paid $6,000 for tuition and fees for Antonio, who is a Junior at Nicholls State University. Antonio is living at home while attending college and he meets all of the tests to be claimed as a dependent. Gary and Karen choose to take the education credit over the tuition and fees deduction. Gary's father passed away in 2021. In 2022, Gary and Karen received $50,000 in life insurance proceeds. Gary and Karen support Karen's mother, Joy Freud (333-66-9999), in an assisted living facility in Houma. They paid 75% of her support in 2022. Joy's only income is $10,000 nontaxable social security benefits. Joy had the Medicare for the full tax year. Gary and Karen had several stock transactions during the year: Gary plays black jack at Harrah's Casino on occasion. This year he had $4,000 in gambling winnings and $3,000 in losses. Gary and Karen did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency. 2022. Kool's depreciation schedule is as follows: 1. Purchased $40,000 of office furniture and equipment held for business use on March 4 , 2022. The assets have a 7-year life. Gary wants to maximize the current year deduction by taking the bonus depreciation. 2. Depreciation on recovery property acquired and placed into service: Gary did not elect a Section 179 deduction for any of the assets above, nor did he take advantage of the depreciation bonus. Gary and Karen's personal expenses for the year are as follows: Gary also donated 100 shares of QRS stock to the State University with a FMV of $9,500, on June 16, 2022. The stock was purchased in 2014 when the value was $1,500. QRS is a publicly traded stock. Gary and Karen paid $6,000 for tuition and fees for Antonio, who is a Junior at Nicholls State University. Antonio is living at home while attending college and he meets all of the tests to be claimed as a dependent. Gary and Karen choose to take the education credit over the tuition and fees deduction. Gary's father passed away in 2021. In 2022, Gary and Karen received $50,000 in life insurance proceeds. Gary and Karen support Karen's mother, Joy Freud (333-66-9999), in an assisted living facility in Houma. They paid 75% of her support in 2022. Joy's only income is $10,000 nontaxable social security benefits. Joy had the Medicare for the full tax year. Gary and Karen had several stock transactions during the year: Gary plays black jack at Harrah's Casino on occasion. This year he had $4,000 in gambling winnings and $3,000 in losses. Gary and Karen did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency