Your clients, the Tax family, came to your office on the $12$th of April $2023$ and supplied you with the

following information for you to prepare their $2022$ tax returns. You immediately asked if they will owe

tax on their return for $2022$ and filed an extension for $2022.$ They did not feel they needed to make a

payment w$/$the extension. Return was then prepared on May $4.$

Evader o$.$ Tax and husband, Avoider, have $3$ children A$,$ B and C$.$ SSN for Evader and husband are $223-$

$45-6779$ and $234-56-6789$ and children, $345-66-8999,437-78-9101,423-81-1616.$ They all live at $1040$

Lane, CP $2000,$ Pa$.18400.$ The ages of the children are $7,9,$ and $21.$ Cis the $21$ year old and is a full time

college student.

FIT w$/$h $$13,500,$ state tax w$/$h

Avoider is an engineer whose W$-2$ shows income of $

$$2,250\mathrm{.}00.$ Medical insurance of $$19,000\mathrm{.}00$ was paid on his behalf and covered the whole family. His

contribution was $$4,200\mathrm{.}00.$

The Tax's Real Estate tax and mortgage interests were $$8,200\mathrm{.}00$ and $$14,500\mathrm{.}00.$ Charitable

contributions $($all cash$)$ $$7,600.$ They have interest and dividend income as follows:

$$200\mathrm{.}00$

Savings Account

Interest:

$$335\mathrm{.}00$

Scranton School District Bonds

Total $$2,400\mathrm{.}00$ of which all are qualifying except $$175\mathrm{.}00$ from foreign

Dividends:

companies from which foreign taxes are paid of $$19\mathrm{.}00.$

Evader has a Women's Clothing store, "Evader's" $,$ EIN $22-2456789$ in a strip mall. However, she moved

her business from her own building to a rented location during $2022.$

She has sales of $$300,000\mathrm{.}00.$

$$

Expenses incurred

Pick$-$up truck

$$3,600\mathrm{.}00$ driven $11,000$ miles, all business, diary kept, $1/2$ of

miles in each $6$ month period

Truck is fully depreciated.

Insurance

$$5,400\mathrm{.}00$

Mortgage Interest

$$4,400\mathrm{.}00$

Vehicle Leases$-3$d yr$.$

$$4,800\mathrm{.}00-$MSRP Price of $$62,000\mathrm{.}00.$ Leased in $2020.$ Vehicle

expenses were $$2,100$ and it was driven $11,500$ miles, $5,000$ in

the first $6$ months. Use current year's table $(3$nd year$)$ to

determine the add back. A diary was kept

Real Estate Taxes Paid

$$6,300\mathrm{.}00$

Rent paid

$$8,500\mathrm{.}00$

Meals and Ent.

$$1,900\mathrm{.}00$ entertainment portion is $$300\mathrm{.}00$

Utilities

$$6,600\mathrm{.}00$

Wages

$$26,000\mathrm{.}00-$None eligible for credit

$$8,500\mathrm{.}00$

Moving Exp.

Professional fees

$$2,600\mathrm{.}00$

Office Expense

$$1,200\mathrm{.}00$

Advertising

$$7,500\mathrm{.}00$

Her Activity code is

Look it up$.$

and ending $$34,250\mathrm{.}00.$ The Store purchased

Her beginning inventory was

$$185,000\mathrm{.}00$ worth of merchandise.

She moved into her new location on $03/17/22$

The old building was sold on $06/17/22$ for $$103,900.$ The in service date was $9/15/14.$ Only MACRS

depreciation was taken. Cost was allocated $$17,000\mathrm{.}00$ land and $$105,000\mathrm{.}00$ for building. $$17,200$ of

the selling price was allocated to land.

She had equipment, with a$7$ year life, which she sold with the building, put in service $9/15/19,$ for

$$7,500\mathrm{.}00$ Seliling price was $$2,100\mathrm{.}00$ No election on depreciation was made. And $5$ yr$.$ equipment put

in service $9/15/14,$ cost $$2,200,179$ elected cost $$1,000$ and elected out of bonus depreciation.

Equipment was sold with the store for $$200\mathrm{.}00$

He paid a monthly check to his ex for $$775\mathrm{.}00$ of which $$365\mathrm{.}00$ is child support. The balance is not part

of the property settlement. The exs Social Security number is $188-88-8888$ and divorce was final

$12/1/12$

$$

He owned a residential rental property. Cost basis land $$15,090\mathrm{.}00,$ building $$195,800\mathrm{.}00.$

Date acquired was $11/05/06$ and sold on

selling price $$210,000\mathrm{.}00$ allocated

between the land,

$\%$ of selling price and balance to building.

There are no prior year's suspended losses.

The Tax's had unrecaptured $1231$ losses of$

When Evader moved the store, she purchased $$3,000$ of new, $7$ year equipment, of which she allocated

$$1,800\mathrm{.}00$ to a sec$.179$ deduction. No other election was made.

The Tax's paid tuition of $$10,300\mathrm{.}00$ for their daughter. The two sons had no tax related expenses.

The new store also required an additional $$4,500$ in new $5$ year equipment. She elected out of the

bonus deduction.

Estimated federal taxes paid $$4,000\mathrm{.}00/$Qtr$.$ Last year's tax liability was $$14,365\mathrm{.}00.$

The Tax's had stock transactions as follows:

$******$ KL: pur. O $9/12/21$ for $$2,050\mathrm{.}00,$ sold $05/10/22$ for $$1,475\mathrm{.}00.$

$******$GH: pur. $01/03/01$ for $$2,650\mathrm{.}00,$ sold $06/03/22$ for $$2,675\mathrm{.}00.$

The rental property had $7$ year assets purchases used, costing $$2,735,$ installed June $12,2015$ MACRS

depreciation was used, no bonus depreciation was taken for these assets. These were the only assets

put in service this year. These assets went with the property when it was sold. The sale price was

$$1,575.$

There is no limit on the $179$ deduction from income.

Avoider's apartment income was $$18,000\mathrm{.}00$ with expenses for insurance $$1,000\mathrm{.}00$ repairs $$300\mathrm{.}00,$

taxes $2,700\mathrm{.}00,$ utilities $$1,500\mathrm{.}00,$ interest $$12,200,$ and supplies $$230\mathrm{.}00.$

C$,$ the daughter, has a W$-2$ showing earnings of $3,450,$ and federal tax withheld of $$32\mathrm{.}00.$

There is no penalty for underpayment of taxes.

The Tax family did not get any advanced child care credit.

Include all schedules that have e