Your completed Project 1 should include the following items, in the following order:

2018 Form 1040: U.S. Individual Income Tax Return (include Schedules 1 6, if applicable)

2018 Schedule C: Profit or Loss from Business 2018 Schedule D: Capital Gains and Losses (and Form 8949)

2018 Schedule SE: SelfEmployment Taxes

1. Jeff's 2018 W2 that he received from his employer is included in the tax information he gives to you. He also includes additional tax forms he received. The following documents are available on Canvas (Additional Client Info.pdf):

   • Jeffs W2 (wage $32,770,00, State income tax is $1,690.00)

   • 1099INT from MO Savings Bank account (interest income $14.00)

   • 1099INT from State of MO Water District (municipal) bonds ( tax exempt interest $150.00)

   • 1099DIV from Green Corp. stock ( total ordinary dividends $770.00)

   • MCDUFFY,LLC (other income $1,000.00)

2. Heather's business generated gross receipts of $246,000 in 2018. During 2018, she wrote checksfor $160,480 related to her business. Heather uses the cash method of accounting and she keeps a separate bank account for her business. An Excel spreadsheet that includes a detailed list of Heathers expenditures and a template for computing tax depreciation is available on Canvas (Business Info and Tax Deprec.xls).

3. Additional businessrelated information:

Heather received $300 on October 15, 2018, from the sale of old computer equipment (#1

which was purchased in January 2015). 4. During the year, the Davises sold the following capital assets:

Asset Acquired Sold Selling price Adjusted Basis Aqua stock 11218 81818 1,500 11,000

Pungo stock 21504 41218 8,400 13,400

Delta Stock 31709 12718 15,100 14,500

Sierra stock 2709 71518 13,200 10,000

Mart Stock 41118 101118 8,500 7,000

Sail boat 12311 3318 6,000 11,500

Note1: The Pungo stock was sold to Heathers brother. Note2: The sailboat was used for personal recreation only. Note3: None of the above transactions were reported on Form 1099B

5. Jeff and Heather have an eight yearold daughter, Taylor (SS# 111887766), and a 5 yearold son, Gibson (111991144), and they provide 100% of their support. Taylor and Gibson attend LS Elementary School.

6. Jeffs grandfather, Martin, died during the year. Jeff and Heather received $25,000 as beneficiaries of a life insurance policy on Jeffs grandfather.

7. Heather began her Strings N Things business in 2015 and purchased several assets during that year. She did not elect Section 179 expensing (and she elected out of bonus depreciation) at thattime because her business was just beginning (with little cash inflow). The following assets, purchased in 2015, are used 100% for business and have been depreciated using MACRS:

   Computer equipment (#1) purchased January 2015 for $5,000 (5year property) Sound system purchased in January 2015 for $12,000 (7year property). Furniture purchased in March 2015 for $9,500 (7year property). Display cases purchased in May 2015, for $14,700 (5year property).

8. In October 2018, Heather purchased computer equipment (#2) for Strings N Things for $23,200. She paid $3,000 down and financed the balance. She has been making payments of $700/month since November 2018. Of the total payments made during 2018, $240 was for interest.

9. The Davises itemized deductions totaled $15,800 for 2018 (do not prepare Schedule A).

PLEASE HELP

HINTS:

1. The best way to approach the project may be to complete it in the following order: Depreciation expense (Form 4562, after completing the excel spreadsheet) Profit and loss from the business (Schedule C), Selfemployment tax (Schedule SE)

   Capital gains & losses (Form 8949 and then Schedule D) Finally, carry over the information from Schedules C, D, and SE to Form 1040, along with any

   other information that needs to be reported on Form 1040.

2. Assume the computer equipment is located at Heathers place of business (i.e., NOT listed

   property).

3. For this assignment (and this assignment only!), report the gain or loss on the sale of the computer

   equipment #1 on Schedule C as other income (line 6) or other expenses (line 27) asappropriate.

4. Ignore Part IV on Schedule C.

5. Enter $1,000,000 on line 11 of Part I on Form 4562. Ignore Parts A, B, & C of Section V on Form

   4562.

6. Neither Jeff nor Heather elects to contribute to the Presidential Election Campaign

7. Heather has a beginning and ending inventory of $10,000 in her business.

8. Use the Tax Tables and the qualified dividend and capital gain worksheet to figure the tax on line 44

   of Form 1040 (both are available on Canvas under Files/Projects/Project 1/Project 1 Tax Forms).

9. Assume the Davises have full health insurance coverage for the entire year through Jeffs

   employer.

10. The Davises do not have a foreign address. They do not want to allow another person to discuss

    their return with the IRS.

11. You are not required to calculate AMT or any tax credits for this project

what else do you need?