Gary and Mary Bodden files a Joint return. Mary owns a business a small business with revenue base of less than $125,000 per year. Mary's Social Security number is 456-78-3896 and Gary's 457-79-3111. Mary is a Avon consultant, she is not employed by Avon. Her investment is at risk. No assets were bought or sold during the 2016 tax year.
Her business is run out of her home. The business is classified as a non store retailer and its code is 454390. She lives in a 3,500 square foot home at 687 East Lansing Ave, Macon, GA 30078. There is a strategically partitioned area with its own entrance ar d store room that is 600 square feet in size. This area is used exclusively for Mary's business. Her home was bought in 2012 although the business started in 2014; assume that the depreciation for the office started in 2014. The home is valued at $375,000.
Mary is quite meticulous in her record keeping and keeps a log to record all her travels. During 2016, Mary traversed Her State and logged 17,000 miles with 11,000 of those attributable to the business. Assume that expenses for the car would be prorated based on miles driven.
The following are expenses and revenues for the 2016 business year.
|
Expenses/revenues
|
$
|
Expenses/revenues
|
$
|
|
Sales of Avon Products
|
110,100
|
Legal expenses
|
550
|
|
Advertising and Merchar dising cost
|
1,200
|
Office supplies
|
200
|
|
Returns and Allowances
|
4,320
|
Sales Expenses -gifts
|
2, 400
|
|
Charitable contribution
|
1,100
|
Office cleaning
|
720
|
|
Car depreciation(busine$ s)
|
450
|
Taxes and license
|
3,450
|
|
Home office Depreciatio 1
|
|
Purchases for 2016
|
50,000
|
|
Health Insurance
|
1,200
|
Telephone and Internet charges
|
2,200
|
|
Car Insurance
|
720
|
Miscellaneous expense ;
|
1,250
|
|
Other Insurance
|
580
|
Conference expenses(entertainment -1,100)
|
4,100
|
The beginning inventory is $3,250 and Inventory at the end of 2016 was $3,250.
Gary and Mary has two kids, ages 17 and 20. Their names are Martha and Georgette. The latter is a college student. Their social security numbers are; Martha -479-65-3400 and Georgette -479-66-8311.
Gary is gainfully employ and made 175,000 in 2016. He paid state taxes of 7,000 and federal taxes of $23,450.
The Bodden's received state a tax refund from last years' return of $445 they deducted $ 4,000 as state taxes last year. In addition, they received a federal refund of $3,700, having paid some $9,000 in state taxes.
Gary received the following qualified dividends of $3,700 and was paid hank interest $600 and Municipal bond interest of $250.00.
They contributed $7,876 to your church and gave Goodwill clothing and furniture valued at $2,700 (FMV).
They contributed $3,120 to a traditional IRA for Mary sho does not have a pension plan.
Self-employment taxes of $600 were paid on the previous year's self-f employment income.
There is a rental property in the name of Gary, the rental from this property is $8,400. The following expenses were incurred for the rental property, mortgage Interest $4,300, taxation $1,000, Management Fees $2,200;
The Bodden's pay $4,000 for the real estate taxes and mortgage interest of $10,450.
During the year medica expenses incurred and reimbursed amount to $6,990. Miscellaneous expenses were $2,900.
During the year the following stock transactions took place to fund their world cruise for the whole family. Stocks purchased in 2014 for 3,500 was sold for 5,750 another batch of stocks bought earlier this year for $1,250 was sold for $2,000.
Required:
Download the schedules from the IRS website and prepare the following:
1. Schedule A, B, C, D and E.
2. Complete the 1040 and compute the tax refund or taxes to be paid for 2016.