Problem
Tax Return
Barbara Gonzales, age 53, is a self-employed tax attorney (social security number 444-88-9999). She is supporting her mother, Martha Garza, age 85 who lives with her. Martha's social security number is 666-99-4444. Barbara lives in a rental at 4597 Campbell Ave. Campbell, CA 95008
Barbara's office is located at 6578 Hamilton Ave. Ste. 456, San Jose, CA 95130.
Her business name is her name- Barbara Gonzales, Attorney. She materially participates in her business. She has the following income and expenses pertaining to her business.
Barbara's gross receipts for 2016 $189,300
Expenses: Insurance $5800
Office Supplies $4897
Payroll $49,455
Depreciation $1489 ( on her office furniture and computer and printers- you do not have to prepare a depreciation form)
Telephone and internet $5699
Rent $ 18000
Advertising $ 1264
Software fees for tax preparation $8,451
Education needed to keep up on latest tax laws $2575
The business uses the cash basis of accounting.
Other income includes Interest from Wells Fargo, $249.
You do not have to calculate self-employment taxes as this will be covered in another chapter.
Barbara sent estimated tax payments to the IRS for the 2016 taxes totaling $15000.
Prepare Barbara's Form 1040 tax return for 2016. You should also prepare a Schedule C.