Use the following information to prepare the tax return of Robert E. Dunkin using Form 1040, Schedule

A, Schedule C, Schedule SE, and Form 8829. This problem is suitable for manual preparation or computer

software application.

Robert E. Dunkin (SSN 392-48-6844) operates a consulting business out of his home

located at 293 E. Main Street, Lafayette, LA 70503. The IRS business code (Schedule

C, line B) is 541600. He uses the cash basis and materially participates in the business.

During 2016, his business generated income of $55,088 and he had the following

expenses: advertising, $150; depreciation expense, $1,630; office expense, $695; and

supplies, $450. Rob drove his personal automobile 537 business miles during 2016. He

uses the standard mileage rate method.

Rob uses one of the rooms in his house regularly and exclusively as a home office. The

size of the room used as an office is 224 square feet. The total square footage of his

home is 2,800 square feet. The expenses of operating the home during the year included

utilities, $3,500; insurance, $250; home mortgage interest, $8,500; and real estate taxes,

$3,205. The depreciable basis in the home is $110,840 ($130,840 minus $20,000 for

the land). His depreciation percentage (Form 8829, line 40) is 2.564%.

a. Complete Schedule C and Form 8829 for Rob Dunkin. Then complete Robs

Schedule SE. b. Based on your answers to Part a., what is the maximum amount Rob

can contribute to a SEP plan for 2016?

c. How long does Rob have to set up a SEP and make his 2016 SEP contribution?

d. Complete Robs Form 1040 assuming that he makes the maximum contribution

allowed to his SEP for 2016. Rob files as single with no dependents. He is 47 years

old and made $10,000 of estimated federal income tax payments for the 2016 tax year.

This amount is reported in the Payments section on Form 1040. Robs only other source

of gross income is $1,120 of taxable interest and his only other deduction for AGI is

$3,600 that he pays during the year for health insurance. Rob's health insurance covers

the full-year. Thus, he is compliant with the ACA mandate.

In addition to the non-home office portion of the interest and taxes on his home, his

other itemized deductions include $2,000 of state income taxes paid during the year,

$1,300 of cash contributions to his alma mater, and $150 of noncash contributions to

Goodwill. Rob does not want $3 to go to the Presidential election campaign fund. He

signs and dates his return on April 11, 2017.