Trailer Swift and her husband, Notso, file a joint income tax return. In 2023, Trailer earned $1,000,000 in salary from performing as a musician, and from selling songs about being dumped by past boyfriends. In 2023, Notso was unemployed. The Swifts own a social media company called Blabber, which has conducted business since 2015. The Swifts are active in running Blabber, which they own equally. The income or loss from Blabber is reported on Schedule C of their income tax return.

In 2023, The Swifts had the following items of income and loss, in addition to Trailer's salary:

Qualified dividends from Dunder Mifflin Common Stock $10,000

Operating loss from Blabber business 50,000, depreciation expense of $50,000, utilities $75,000. ($100,000) consisting of customer revenues of $75,000, salaries and wages of

They had the following stock sales in 2023:

Date purchased Date sold Cost basis Sales Price

100 shares of ABC Corp3/1/20238/15/2023$50,000$30,000

200 shares of XYZ Corp9/1/202010/1/2023$60,000120,000

The Swifts have a short-term capital loss carryforward from 2021 in the amount of $10,000.

In addition, the Swifts in 2023 sold their Blabber office in Old Forge, PA. and realized the following:

Date purchased Purchase price Depreciation claimed to date Cash sale price Debt assumed by buyer

Land 1/18/2015$100,000 $0 $120,000 $60,000

Building 1/18/2012 $300,000 $70,000 $330,000 $0

Office furniture and

Computers 1/20/2020$100,000 $50,000 $60,000 $0

In 2021, the Swifts had a tax loss on the sale of a pick-up truck used in Blabber's business in the amount of $20,000

In 2023, Trailer sold an Andy Warhol autographed painting for $80,000. She paid $40,000 for the painting in 2021.

The Swifts take the standard deduction. Neither of the Swifts are over 65 years old, and their eyesight is good.

The Swifts are in the 37% tax bracket, which means their capital gain rate is 20%.

SOLVE:

1. Compute capital gains or loss from the sale of capital assets

2. Compute Sec 1231, 1250, 1245 gains or losses from sale of business assets

3. Compute 2023 taxable income

4. Compute 2023 income tax. Disregard net investment income tax and self-employment tax.

Please show all of your work. If you wish to use IRS tax forms to do this problem, you may do so. You can get forms on www.IRS.gov

You need not complete these forms. You can prepare your own schedules if you wish. If you want to use tax forms, you should use the following forms:

Form 1040

Schedule 1

Schedule B

Schedule C

Schedule D

Forms 8949

Form 4797

Qualified Dividends and Capital Gains Tax Worksheet

This problem is worth 30 points. The other questions are worth 70 points.

You can do this problem, just take it one step at a time. I have faith in you! Good luck! Apologies to Taylor Swift fans, if any, in our class.