Unit 1 Tax Returns

Jay and JoAnn Jefferson are married and have a joint consulting business. The business taxable income of $100,000 for 2016 and they both take $35,000 out of the business to live on and leave $26,000 in the business to expand. Here are the business revenue and expenses:

Consulting revenue	$256,000
Salaries expense, employees	100,000
Payroll tax expense	18,000
Owners? Draw	70,000
Rent expense	12,000
New Computer equipment (total cost) Claim section 179 deduction	10,000
Travel expense	4,000
Health Insurance (employees)	6,000
Health Insurance (owners)	4,000
Meals	2,000
Supplies	5,000

Tax return 1: Assuming Jay and JoAnn have an unincorporated business that they run as a sole proprietorship, prepare their joint Federal income tax return for 2016. Assume that they have no dependents, do have insurance coverage, do not have any other income or itemized deductions, and they made quarterly Federal income tax payments totaling $24,000. Don?t forget to include a standard deduction and personal exemptions. You should complete a Schedule C, Schedule SEs, Form 4562, and a Form 1040.

Tax return 2: Assuming Jay and JoAnn have this same business that they run as a regular corporation, prepare their joint Federal income tax return for 2016. They each received a W-2 from the business which is attached.

Assume that they have no dependents and do not have any other income or itemized deductions. Don?t forget to include a standard deduction and personal exemptions. You should complete a Form 1040. Note: In this situation, the corporation would pay tax on the $100,000 of income after reducing it for the salaries to officers of $70,000 (35,000 each and medical insurance or $2,000 each). The corporate tax would be (15%).

Tax return 3: Assuming Jay and JoAnn have this same business that they run as a partnership, prepare their joint Federal income tax return for 2016. Attached is the copy of the partnership K-1 for each of them. Assume that they have no dependents, do not have any other income or itemized deductions, and they made quarterly Federal income tax payments totaling $24,000. Don?t forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Schedule SEs, Form 4562, and a Form 1040. Don?t forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Schedules SE, Form 4562, and a Form 1040.

Note: In computing the income distributed on this K-1. There were no salaries only the Line 1 income and the medical insurance paid by the partnership was shown as a guaranteed payment to partners and reported on a separate line. The section 179 depreciation was also reported separately.

Tax return 4: Assuming Jay and JoAnn have this same business that they run as an S corporation, prepare their joint Federal income tax return for 2016. Attached is the copy of the S corporation K-1 for each of them and W-2. Assume that they have no dependents, do not have any other income or itemized deductions. Don?t forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Form 4562, and a Form 1040. Note: In computing the income distributed on this K-1. the salaries were subtracted but the section 179 depreciation was not subtracted and reported separately. The amount of the officer's health insurance was deducted by the corporation, included in the W-2 wages and indicated on box 12 of the W-2. Therefore, each K-1 reflects half of the business net income and half the 10,000 section 179 depreciation.

Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 35000.00 010-35-6667 3 Social security wages 12000.00 5 Medicare wages and tips 75-3566676 Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 2170.00 3 Social security wages 35000.00 5 Medicare wages and tips 75-3566676 507.50 c Employer's name, address, and ZIP code 2170.00 6 Medicare tax withheld 35000.00 507.50 c Employer's name, address, and ZIP code Jefferson Consulting, Inc. Jefferson Consulting, Inc. 300 Main Street Dallas TX 75201 300 Main Street Dallas TX 75201 d Control number d Control number e Employee's name, address, and ZIP code e Employee's name, address, and ZIP code Jeff Jefferson 300 Main Street Dallas TX 75201 Jeff Jefferson 300 Main Street Dallas TX 75201 7 Social security tips 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C C o d e 12d C o d e 13 Statutory employee 14 Other APPLIED FOR 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C 12d C Statutory employee 14 Other 35000.00 15 State Employer's state I.D. # 18 Local wages, tips, etc. o d e 13 Third-party sick pay TX 16 State wages, tips, etc. 19 Local income tax 17 State income tax 20 Locality name Dept. of the Treasury - IRS Copy B To Be Filed With Employee's FEDERAL Tax Return This information is being furnished to the Internal Revenue Service. DXA DD 2000.00 o d e C o d e o d e Retirement plan 7 Social security tips DD 2000.00 o d e TX 12000.00 4 Social security tax withheld 35000.00 b Employer ID number (EIN) 6 Medicare tax withheld o d e Retirement plan APPLIED FOR Third-party sick pay 35000.00 15 State Employer's state I.D. # 18 Local wages, tips, etc. 16 State wages, tips, etc. 19 Local income tax 17 State income tax 20 Locality name Dept. of the Treasury - IRS Copy 2 To be Filed With Employee's State, City, or Local Income Tax Return DXA This information is being furnished to the IRS. If you are required to file a tax return, a negligence penalty/other sanction may be imposed on you if this income is taxable and you fail to report it. Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 010-35-6667 12000.00 75-3566676 Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 010-35-6667 4 Social security tax withheld 35000.00 5 Medicare wages and tips 2016 2 Federal income tax withheld 35000.00 3 Social security wages b Employer ID number (EIN) 2170.00 35000.00 75-3566676 507.50 35000.00 Jefferson Consulting, Inc. 300 Main Street Dallas TX 75201 300 Main Street Dallas TX 75201 d Control number d Control number e Employee's name, address, and ZIP code e Employee's name, address, and ZIP code Jeff Jefferson 300 Main Street Dallas TX 75201 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12c C 12d C o d e Statutory employee 14 Other APPLIED FOR 15 State Employer's state I.D. # 18 Local wages, tips, etc. Third-party sick pay 35000.00 16 State wages, tips, etc. 19 Local income tax Copy C For EMPLOYEE'S RECORDS (See Notice on back.) DXA 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C 12d C o d e 13 Statutory employee 14 Other TX 17 State income tax 20 Locality name Dept. of the Treasury - IRS DD 2000.00 o d e C o d e o d e Retirement plan 7 Social security tips DD 2000.00 o d e 13 507.50 Jeff Jefferson 300 Main Street Dallas TX 75201 7 Social security tips 12b 2170.00 6 Medicare tax withheld c Employer's name, address, and ZIP code Jefferson Consulting, Inc. C o d e 12000.00 4 Social security tax withheld 35000.00 5 Medicare wages and tips 2016 2 Federal income tax withheld 35000.00 3 Social security wages b Employer ID number (EIN) 6 Medicare tax withheld c Employer's name, address, and ZIP code TX 2016 2 Federal income tax withheld 35000.00 010-35-6667 4 Social security tax withheld 35000.00 b Employer ID number (EIN) 2016 2 Federal income tax withheld o d e Retirement plan APPLIED FOR 15 State Employer's state I.D. # 18 Local wages, tips, etc. Third-party sick pay 35000.00 16 State wages, tips, etc. 19 Local income tax Copy 2 To be Filed With Employee's State, City, or Local Income Tax Return DXA 17 State income tax 20 Locality name Dept. of the Treasury - IRS Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 35000.00 010-35-6668 2016 2 Federal income tax withheld 12000.00 3 Social security wages 4 Social security tax withheld 5 Medicare wages and tips 6 Medicare tax withheld b Employer ID number (EIN) Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 35000.00 010-35-6668 2016 2 Federal income tax withheld 12000.00 3 Social security wages 4 Social security tax withheld 5 Medicare wages and tips 6 Medicare tax withheld b Employer ID number (EIN) 75-3566676 75-3566676 c Employer's name, address, and ZIP code c Employer's name, address, and ZIP code Jefferson Consulting, Inc. Jefferson Consulting, Inc. 300 Main Street Dallas TX 75201 300 Main Street Dallas TX 75201 d Control number d Control number e Employee's name, address, and ZIP code e Employee's name, address, and ZIP code JoAn Jefferson 300 Main St Dallas TX 75201 JoAn Jefferson 300 Main St Dallas TX 75201 7 Social security tips 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C 12d C o d e 13 Statutory employee 14 Other 15 State Employer's state I.D. # 18 Local wages, tips, etc. 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C 12d C 16 State wages, tips, etc. 19 Local income tax Statutory employee 14 Other 17 State income tax 20 Locality name Dept. of the Treasury - IRS Copy B To Be Filed With Employee's FEDERAL Tax Return This information is being furnished to the Internal Revenue Service. DXA o d e 13 Third-party sick pay DD 2000.00 o d e C o d e o d e Retirement plan 8 Allocated tips DD 2000.00 o d e C o d e 7 Social security tips o d e Retirement plan 15 State Employer's state I.D. # 18 Local wages, tips, etc. Third-party sick pay 16 State wages, tips, etc. 19 Local income tax 17 State income tax 20 Locality name Dept. of the Treasury - IRS Copy 2 To be Filed With Employee's State, City, or Local Income Tax Return DXA This information is being furnished to the IRS. If you are required to file a tax return, a negligence penalty/other sanction may be imposed on you if this income is taxable and you fail to report it. Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 010-35-6668 2016 2 Federal income tax withheld 35000.00 12000.00 3 Social security wages 4 Social security tax withheld 5 Medicare wages and tips 6 Medicare tax withheld b Employer ID number (EIN) Form W-2 Wage and Tax Statement OMB No. 1545-0008 a Employee's social security 1 Wages, tips, other comp. number 010-35-6668 2016 2 Federal income tax withheld 35000.00 12000.00 3 Social security wages 4 Social security tax withheld 5 Medicare wages and tips 6 Medicare tax withheld b Employer ID number (EIN) 75-3566676 75-3566676 c Employer's name, address, and ZIP code c Employer's name, address, and ZIP code Jefferson Consulting, Inc. Jefferson Consulting, Inc. 300 Main Street Dallas TX 75201 300 Main Street Dallas TX 75201 d Control number d Control number e Employee's name, address, and ZIP code e Employee's name, address, and ZIP code JoAn Jefferson 300 Main St Dallas TX 75201 JoAn Jefferson 300 Main St Dallas TX 75201 7 Social security tips 8 Allocated tips 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 13 Statutory employee 14 Other 15 State Employer's state I.D. # 18 Local wages, tips, etc. 12c C 12d C o d e 16 State wages, tips, etc. 19 Local income tax Copy C For EMPLOYEE'S RECORDS (See Notice on back.) DXA 9 10 Dependent care benefits 11 Nonqualified plans 12a See instructions for box 12 C 12b 12c C 12d C Third-party sick pay 17 State income tax 20 Locality name Dept. of the Treasury - IRS DD 2000.00 o d e C o d e o d e Retirement plan 8 Allocated tips DD 2000.00 o d e C o d e 7 Social security tips 13 Statutory employee 14 Other 15 State Employer's state I.D. # 18 Local wages, tips, etc. o d e o d e Retirement plan 16 State wages, tips, etc. 19 Local income tax Copy 2 To be Filed With Employee's State, City, or Local Income Tax Return DXA Third-party sick pay 17 State income tax 20 Locality name Dept. of the Treasury - IRS 651113 Final K-1 Schedule K-1 (Form 1065) Part III Department of the Treasury Internal Revenue Service 1 For calendar year 2016, or tax year beginning ending , 20 Part I Information About the Partnership Ordinary business income (loss) 15 Credits 16 Foreign transactions 17 Alternative minimum tax (AMT) items 18 Tax-exempt income and 53,000 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Guaranteed payments 5 Interest income 2,000 Partnership's employer identification number 75-1455637 B OMB No. 1545-0123 Partner's Share of Current Year Income, Deductions, Credits, and Other Items , 2016 Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A Amended K-1 Partnership's name, address, city, state, and ZIP code 6a Ordinary dividends Jefferson Consulting Partners 300 Main Street Dallas, TX 75201 6b Qualified dividends C 7 Royalties 8 Net short-term capital gain (loss) 9a Net long-term capital gain (loss) 9b Collectibles (28%) gain (loss) 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) 11 Other income (loss) IRS Center where partnership filed return Ogden, UT 84201-0011 D Check if this is a publicly traded partnership (PTP) Part II E Information About the Partner Partner: 1 Partner's identifying number 010-35-6667 F Partner's name, address, city, state, and ZIP code Jeff Jefferson 300 Main Street Dallas, TX 75201 nondeductible expenses G X General partner or LLC member-manager Limited partner or other LLC member H X Domestic partner Foreign partner I1 What type of entity is this partner? I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here C 500 Active Individual 19 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 . . Section . . . .179 . deduction . . . . . . . . . . . . A. . . . J Beginning Loss Capital K Ending 50.000000% 50.000000% 50.000000% Profit 35,000 5,000 Partner's share of profit, loss, and capital (see instructions): 13 50.000000% 50.000000% 50.000000% Other deductions M 2,000 20 Other information Partner's share of liabilities at year end: Nonrecourse . . . . . . . . . . . . $ . . . . . . . . . . . . . . . . .14. . Self-employment . . . . . . . earnings . . . . (loss) . . . . . . . . . . . . . . . . . Qualified nonrecourse financing . . . . $. . . . . . . . . . . . . . . . . A . . . . . . . . . . . . . . 55,000 . . . . . . . . . . . . . . . . . . . Recourse . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L C 128,000 *See attached statement for additional information. Partner's capital account analysis: Beginning capital account . . . . . . . $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital contributed during the year . . . $. . . . . . . . . . . . . 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current year increase (decrease) . . . . $ . . . . . . . . . . . 51,500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Withdrawals & distributions . . . . . . $. (. . . . . . . . . . 35,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ending capital account . . . . . . . . $. . . . . . . . . . . .17,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax basis GAAP Section 704(b) book Other (explain) M Did the partner contribute property with a built-in gain or loss? Yes X No If "Yes," attach statement (see instructions) For Paperwork Reduction Act Notice, see Instructions for Form 1065. HTA IRS.gov/form1065 Schedule K-1 (Form 1065) 2016 Jeff Jefferson 010-35-6667 K-1 Statement (Sch K-1, Form 1065) Line 13 - Deductions M Code M - Amounts paid for medical insurance . . . . . . . . . . . . . . . . . . . . . . . . . .M . . . . . 2,000 . . . . . . . . Line 14 - Self-Employment A Code A - Net earnings (loss) from self-employment . . . . . . . . . . . . . . . . . . . . . . . A. . . . . 55,000 . . . . . . . . C Code C - Gross non-farm income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. . . . 128,000 . . . . . . . . . Line 18 - Tax-Exempt Income and Nondeductible Expenses C Code C - Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. . . . . . 500 . . . . . . . Line 19 - Distributions A Code A - Cash and marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .A . . . . 35,000 . . . . . . . . . 651113 Final K-1 Schedule K-1 (Form 1065) Part III Department of the Treasury Internal Revenue Service 1 For calendar year 2016, or tax year beginning ending , 20 Part I Information About the Partnership Ordinary business income (loss) 15 Credits 16 Foreign transactions 17 Alternative minimum tax (AMT) items 18 Tax-exempt income and 53,000 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Guaranteed payments 5 Interest income 2,000 Partnership's employer identification number 75-1455637 B OMB No. 1545-0123 Partner's Share of Current Year Income, Deductions, Credits, and Other Items , 2016 Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A Amended K-1 Partnership's name, address, city, state, and ZIP code 6a Ordinary dividends Jefferson Consulting Partners 300 Main Street Dallas, TX 75201 6b Qualified dividends C 7 Royalties 8 Net short-term capital gain (loss) 9a Net long-term capital gain (loss) 9b Collectibles (28%) gain (loss) 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) 11 Other income (loss) IRS Center where partnership filed return Ogden, UT 84201-0011 D Check if this is a publicly traded partnership (PTP) Part II E Information About the Partner Partner: 2 Partner's identifying number 010-35-6668 F Partner's name, address, city, state, and ZIP code JoAn Jefferson 300 Main Street Dallas, TX 75201 nondeductible expenses G X General partner or LLC member-manager Limited partner or other LLC member H X Domestic partner Foreign partner I1 What type of entity is this partner? I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here C 500 Active Individual 19 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 . . Section . . . .179 . deduction . . . . . . . . . . . . A. . . . J Beginning Loss Capital K Ending 50.000000% 50.000000% 50.000000% Profit 35,000 5,000 Partner's share of profit, loss, and capital (see instructions): 13 50.000000% 50.000000% 50.000000% Other deductions M 2,000 20 Other information Partner's share of liabilities at year end: Nonrecourse . . . . . . . . . . . . $ . . . . . . . . . . . . . . . . .14. . Self-employment . . . . . . . earnings . . . . (loss) . . . . . . . . . . . . . . . . . Qualified nonrecourse financing . . . . $. . . . . . . . . . . . . . . . . A . . . . . . . . . . . . . . 55,000 . . . . . . . . . . . . . . . . . . . Recourse . . . . . . . . . . . . . $. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L C 128,000 *See attached statement for additional information. Partner's capital account analysis: Beginning capital account . . . . . . . $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital contributed during the year . . . $. . . . . . . . . . . . . 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current year increase (decrease) . . . . $ . . . . . . . . . . . 51,500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Withdrawals & distributions . . . . . . $. (. . . . . . . . . . 35,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ending capital account . . . . . . . . $. . . . . . . . . . . .17,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax basis GAAP Section 704(b) book Other (explain) M Did the partner contribute property with a built-in gain or loss? Yes X No If "Yes," attach statement (see instructions) For Paperwork Reduction Act Notice, see Instructions for Form 1065. HTA IRS.gov/form1065 Schedule K-1 (Form 1065) 2016 JoAn Jefferson 010-35-6668 K-1 Statement (Sch K-1, Form 1065) Line 13 - Deductions M Code M - Amounts paid for medical insurance . . . . . . . . . . . . . . . . . . . . . . . . . .M . . . . . 2,000 . . . . . . . . Line 14 - Self-Employment A Code A - Net earnings (loss) from self-employment . . . . . . . . . . . . . . . . . . . . . . . A. . . . . 55,000 . . . . . . . . C Code C - Gross non-farm income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. . . . 128,000 . . . . . . . . . Line 18 - Tax-Exempt Income and Nondeductible Expenses C Code C - Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. . . . . . 500 . . . . . . . Line 19 - Distributions A Code A - Cash and marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .A . . . . 35,000 . . . . . . . . . Unit 1 Tax Returns Jay and JoAnn Jefferson are married and have a joint consulting business. The business taxable income of $100,000 for 2016 and they both take $35,000 out of the business to live on and leave $26,000 in the business to expand. Here are the business revenue and expenses: Consulting revenue Salaries expense, employees Payroll tax expense Owners' Draw Rent expense New Computer equipment (total cost) Claim section 179 deduction Travel expense Health Insurance (employees) Health Insurance (owners) Meals Supplies $256,000 100,000 18,000 70,000 12,000 10,000 4,000 6,000 4,000 2,000 5,000 Tax return 1:Assuming Jay and JoAnn have an unincorporated business that they run as a sole proprietorship, prepare their joint Federal income tax return for 2016. Assume that they have no dependents, do have insurance coverage, do not have any other income or itemized deductions, and they made quarterly Federal income tax payments totaling $24,000. Don't forget to include a standard deduction and personal exemptions. You should complete a Schedule C, Schedule SEs, Form 4562, and a Form 1040. Tax return 2:Assuming Jay and JoAnn have this same business that they run as a regular corporation, prepare their joint Federal income tax return for 2016. They each received a W-2 from the business which is attached. Assume that they have no dependents and do not have any other income or itemized deductions. Don't forget to include a standard deduction and personal exemptions. You should complete a Form 1040. Note: In this situation, the corporation would pay tax on the $100,000 of income after reducing it for the salaries to officers of $70,000 (35,000 each and medical insurance or $2,000 each). The corporate tax would be (15%). Tax return 3: Assuming Jay and JoAnn have this same business that they run as a partnership, prepare their joint Federal income tax return for 2016. Attached is the copy of the partnership K-1 for each of them. Assume that they have no dependents, do not have any other income or itemized deductions, and they made quarterly Federal income tax payments totaling $24,000. Don't forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Schedule SEs, Form 4562, and a Form 1040. Don't forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Schedules SE, Form 4562, and a Form 1040. Note: In computing the income distributed on this K-1. There were no salaries only the Line 1 income and the medical insurance paid by the partnership was shown as a guaranteed payment to partners and reported on a separate line. The section 179 depreciation was also reported separately. Tax return 4:Assuming Jay and JoAnn have this same business that they run as an S corporation, prepare their joint Federal income tax return for 2016. Attached is the copy of the S corporation K-1 for each of them and W-2. Assume that they have no dependents, do not have any other income or itemized deductions. Don't forget to include a standard deduction and personal exemptions. You should complete a Schedule E (page 2), Form 4562, and a Form 1040. Note: In computing the income distributed on this K-1. the salaries were subtracted but the section 179 depreciation was not subtracted and reported separately. The amount of the officer's health insurance was deducted by the corporation, included in the W-2 wages and indicated on box 12 of the W-2. Therefore, each K-1 reflects half of the business net income and half the 10,000 section 179 depreciation