Question

Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth was born on July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund.

The following information is shown on Beth’s 2016 Wage and Tax Statement (Form W–2).

Line	Description	Amount
1	Wages, tips, other compensation	$65,000.00
2	Federal income tax withheld	10,500.00
3	Social Security wages	65,000.00
4	Social Security tax withheld	4,030.00
5	Medicare wages and tips	65,000.00
6	Medicare tax withheld	942.50
15	State	Arizona
16	State wages, tips, etc.	65,000.00
17	State income tax withheld	1,954.00

Other 2016 transactions include the following.

Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099-INT. She received qualified dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth's dividend payments on a Form 1099-DIV.

Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2016. On her 2015 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld by her employer.

Fees earned from her part-time tax practice totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service.

On February 8, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, Beth sold the stock for $14 a share.

Beth bought a used sport utility vehicle for $6,000 on June 5. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, she sold the vehicle to a friend for $6,500.

On January 2, Beth acquired 100 shares of Blue Corporation common stock for $30 a share. She sold the stock on December 19 for $55 a share.

Beth records revenues of $16,000 from the sale of a software program she developed. Beth incurred the following expenditures in connection with her software development business.

Cost of personal computer (100% business use)	$7,000
Cost of printer (100% business use)	2,000
Furniture	3,000
Supplies	650
Fee paid to computer consultant	3,500

Beth elected to deduct the maximum portion of the cost of the computer, printer, and furniture allowed under the provisions of § 179. These items were placed in service on January 15 and used 100 percent in her business.

Although her employer suggested that Beth attend a convention on current developments in corporate taxation, Beth was not reimbursed for the travel expenses of $1,420 she incurred in attending the conference. The $1,420 included $200 for meals.

Beth paid $300 for prescription medicines and $2,875 in physician interest to credit card bills and hospital bills. Medical insurance premiums were paid by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage at Valley National Bank was $3,845, and interest paid to credit card companies totaled $320.

Beth contributed $2,080 to various qualified charities during the year. Professional dues and subscriptions totaled $350.

Beth paid $1,000 in estimated Federal income taxes throughout the year. She was covered for the entire year by Mesa Manufacturing’s health insurance policy.

Required:

Compute the 2016 net tax payable or refund due for Beth R. Jordan. You will need Forms 1040, 2106, and 4562 and Schedules A, B, C, D, and SE and the Qualified Dividends and Capital Gain Tax Worksheet.

Make realistic assumptions about any missing data.

If an amount box does not require an entry or the answer is zero, enter "0".

Enter all amounts as positive numbers, unless instructed otherwise.

It may be necessary to complete the tax schedules before completing Form 1040.

When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

Use the 2016 Tax Rate Schedule provided. Do not use the Tax Tables.

Schedule SE

Complete Beth's Schedule SE for 2016. Round lines 4, 5, and 6 to the nearest dollar.

SCHEDULE SE (Form 1040) Department of the Treasury Internal Revenue Service (99)	Self-Employment Tax ? Information about Schedule SE and its separate instructions is at www.irs.gov/schedulese. ? Attach to Form 1040 or Form 1040NR.	OMB No. 1545-0074
		2016 Attachment Sequence No. 17

Name of person with self-employment income (as shown on Form 1040 or Form 1040NR) BETH R JORDON	Social security number of person with self-employment income ?	123-45-6789
Before you begin: To determine if you must file Schedule SE, see the instructions.
May I Use Short Schedule SE or Must I Use Long Schedule SE?
Note. Use this flowchart only if you must file Schedule SE. If unsure, see Who Must File Schedule SE in the instructions.

			Did you receive wages or tips in 2016?
		No								Yes
	?		?						?
Are you a minister, member of a religious order, or Christian Science practitioner who received IRS approval not to be taxed on earnings from these sources, but you owe self-employment tax on other earnings?					Yes ?			Was the total of your wages and tips subject to social security or railroad retirement (tier 1) tax plus your net earnings from self-employment more than $118,500?			Yes ?
		No								No
	?								?
Are you using one of the optional methods to figure your net earnings (see instructions)?					Yes ?			Did you receive tips subject to social security or Medicare tax that you didn't report to your employer?			Yes ?
		No								No
	?								?
Did you receive church employee income (see instructions) reported on Form W-2 of $108.28 or more?					Yes ?		? No	Did you report any wages on Form 8919, Uncollected Social Security and Medicare Tax on Wages?			Yes ?
		No
	?										?
You may use Short Schedule SE below							?	You must use Long Schedule SE on page 2

Section A—Short Schedule SE. Caution. Read above to see if you can use Short Schedule SE.
1a	Net farm profit or (loss) from Schedule F, line 34, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				1a
b	If you received social security retirement or disability benefits, enter the amount of Conservation Reserve Program payments included on Schedule F, line 4b, or listed on Schedule K-1 (Form 1065), box 20, code Z. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				1b	()
2	Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Ministers and members of religious orders, see instructions for types of income to report on this line. See instructions for other income to report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				2
3	Combine lines 1a, 1b, and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				3
4	Multiply line 3 by 92.35% (0.9235). If less than $400, you don't owe self-employment tax; don't file this schedule unless you have an amount on line 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?				4
	Note. If line 4 is less than $400 due to Conservation Reserve Program payments on line 1b, see instructions.
5	Self-employment tax. If the amount on line 4 is:
	• $118,500 or less, multiply line 4 by 15.3% (0.153). Enter the result here and on Form 1040, line 57,or Form 1040NR, line 55.
	• More than $118,500, multiply line 4 by 2.9% (0.029). Then, add $14,694 to the result.
	Enter the total here and on Form 1040, line 57, or Form 1040NR, line 55 . . . . . . . . . . . . . . . . . . . .				5
6	Deduction for one-half of self-employment tax.
	Multiply line 5 by 50% (0.50). Enter the result here and on Form 1040, line 27, or Form 1040NR, line 27 . . . . . . . . . . . . . . . . . . . . .	6
KIA	For Paperwork Reduction Act Notice, see your tax return instructions.			Schedule SE (Form 1040) 2016

2016 Tax Rate Schedules

Use the 2016 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.)

2016 Tax Rate Schedules
Single—Schedule X											Head of household—Schedule Z
If taxable income is: Over—		But not over—		The tax is:				of the amount over—			If taxable income is: Over—		But not over—		The tax is:				of the amount over—
$0		$9,275		. . . . . .		10%		$0			$0		$13,250		. . . . . .		10%		$0
9,275		37,650		$927.50	+	15%		9,275			13,250		50,400		$1,325.00	+	15%		13,250
37,650		91,150		5,183.75	+	25%		37,650			50,400		130,150		6,897.50	+	25%		50,400
91,150		190,150		18,558.75	+	28%		91,150			130,150		210,800		26,835.00	+	28%		130,150
190,150		413,350		46,278.75	+	33%		190,150			210,800		413,350		49,417.00	+	33%		210,800
413,350		415,050		119,934.75	+	35%		413,350			413,350		441,000		116,258.50	+	35%		413,350
415,050		. . . . . .		120,529.75	+	39.6%		415,050			441,000		. . . . . .		125,936.00	+	39.6%		441,000
Married filing jointly or Qualifying widow(er)—Schedule Y-1											Married filing separately—Schedule Y-2
If taxable income is: Over—		But not over—		The tax is:				of the amount over—			If taxable income is: Over—		But not over—		The tax is:				of the amount over—
$0		$18,550		. . . . . .		10%		$0			$0		$9,275		. . . . . .		10%		$0
18,550		75,300		$1,855.00	+	15%		18,550			9,275		37,650		$927.50	+	15%		9,275
75,300		151,900		10,367.50	+	25%		75,300			37,650		75,950		5,183.75	+	25%		37,650
151,900		231,450		29,517.50	+	28%		151,900			75,950		115,725		14,758.75	+	28%		75,950
231,450		413,350		51,791.50	+	33%		231,450			115,725		206,675		25,895.75	+	33%		115,725
413,350		466,950		111,818.50	+	35%		413,350			206,675		233,475		55,909.25	+	35%		206,675
466,950		. . . . . .		130,578.50	+	39.6%		466,950			233,475		. . . . . .		65,289.25	+	39.6%		233,475

Answer 1