Question

Dave (SSN 412-34-5670) and Alicia (SSN 412-34-5671) Stanley are married and retired at age 51. The couple’s income consists of rental property, stock investments, and royalties from an invention. They sold their large house that they had purchased six years ago for $580,000 on October 18, 2017, for $1 million. They now live in a condo at 101 Magnolia Lane, Suite 15, Highland Park, FL 33853.

The rental property is an apartment complex (building cost $1.5 million and was purchased January 5, 2017) with 30 units that rent for $27,000 per month and are at 90% occupancy.

Rental income		$	291,600
Salaries			115,000
Payroll taxes			8,798
Real estate taxes			18,750
Interest			45,000
Repairs and maintenance			29,000
Depreciation	(Calculate - ignore land value)

The following information is also for the year:

1099-INT	Old Bank	$	22,000
1099-DIV	Dell, Inc. Ordinary dividends		15,250
	Qualified dividends		15,250
1099-DIV	IBM, Inc. Ordinary dividends		8,650
	Qualified dividends		8,650
1099-DIV	Pepsi, Inc. Ordinary dividends		18,785
	Qualified dividends		18,785
1099-MISC	Box 2 royalties		152,300

	Purchased	Sold	Sale Price			Basis			Gain/Loss
Dell (held 9 mo.)	12/01/16	09/01/17	$	15,000		$	9,000			$	6,000
Pepsi (held 4 mo.)	09/01/17	12/29/17		17,000			25,000				(8,000	)
IBM (held 30 mo.)	06/05/15	12/05/17		38,000			20,000				18,000

On January 3, 2018, Dave repurchased the exact number of shares he sold on December 29, 2017. The Stanleys paid $13,000 each quarter (four payments) in federal estimated income taxes.

Prepare Form 1040 for the Stanleys. Taxpayers had qualifying health care coverage at all times during the tax year. You will also need Schedule B, Schedule D, Schedule E, Form 4562, Form 8949 and Form 8960. (List the names of the taxpayers in the order in which they appear in the problem. Input all the values as positive numbers. Round all intermediate computations and final answers to nearest whole dollar. Instructions can be found on certain cells within the forms.)

Answer 1

Form	1040		Department of the Treasury––Internal Revenue Service      (99)												2017
			U.S. Individual Income Tax Return																OMB No. 1545-0074				IRS Use Only—Do not write or staple in this space.
	For the year Jan. 1--Dec. 31, 2017, or other tax year beginning															,2017, ending							See separate instructions.
	Your first name and initial							Last name															Your social security number
Dave								Stanley															412-34-5670
	If joint return, spouse's name & initial							Last name															Spouse's social security number
Alicia																							412-34-5671
	Home address (number and street). If you have a P.O. box, see instructions.																			Apt. no.					Make sure the SSN(s) above and on line 6c are correct.
101 Magnolia Lane, Suite 15, Highland Park,
	City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).																						Presidential Election Campaign
FL 33853.																							Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or
	Foreign country name											Foreign province/state/county							Foreign postal code
																							refund.				You			Spouse
Filing Status		1		Single														4		Head of household (with qualifying person). (See instructions.)
		2	x	Married filing joint return (even if only one had income)																If the qualifying person is a child but not your dependent, enter
Check only one		3		Married filing separate return. Enter spouse's SSN above																this child’s name here.
box.				and full name here.														5		Qualifying widow(er) (see instructions)
																										Boxes checked on 6a and 6b.
		6a	X	Yourself.		If someone can claim you as a dependent, do not check box 6a .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																									2
																										No. of children on 6c who:
Exemptions		b	X	Spouse .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .
		c	Dependents:										(2) Dependent's					(3) Dependent's			(4)       if child under age 17					• lived with you
													social security					relationship to			qualifying for child tax credit					• did not live with
If more than four			(1) First name			Last name							number					you					(see instructions)			you due to divorce or separation (see instructions)
dependents, see																									0
instructions and																									0
check here.																									0	Dependents on 6c not entered above
																									0
																										Add numbers on lines above
		d		Total number of exemptions claimed .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					0						2
Income		7		Wages, salaries, tips, etc. Attach Form(s) W-2													.   .   .   .   .   .   .   .   .								7	0
		8	a	Taxable interest. Attach Schedule B if required.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					8a	22,000
Attach Form(s)			b	Tax-exempt interest. Do not include on line 8a													.   .   .   .   .   .   .   .   .	8b		0
W-2 here. Also		9	a	Ordinary dividends. Attach Schedule B if required.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					9a	0
attach Forms			b	Qualified dividends													.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	9b		42,685
W-2G and		10		Taxable refunds, credits, or offsets of state and local income taxes   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					10
1099-R if tax		11		Alimony received															.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	.   .   .   .   .   .   .   .					11
was withheld.		12		Business income or (loss). Attach Schedule C or C-EZ.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					12	0
		13		Capital gain or (loss). Attach Schedule D if required. If not required, check here.																		####			13	436,000
If you did not		14		Other gains or (losses). Attach Form 4797																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	14
get a W-2,		15	a	IRA distributions								15a	0					b	Taxable amount					.   .   .   .   .	15b	0
see instructions.		16	a	Pensions and annuities								16a	25,000					b	Taxable amount					.   .   .   .   .	16b	0
		17		Rental real estate, royalties, partnerships, S corporations, trusts, etc.     Attach Schedule E.																					17	227,352
		18		Farm income or (loss). Attach Schedule F.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					18	0
		19		Unemployment compensation . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					19
		20	a	Social security benefits								20a	0					b	Taxable amount .   .   .   .   .   .   .						20b	0
		21		Other income. List type and amount.																					21	0
		22		Combine the amounts in the far right column for lines 7 through 21.														This is your total income							22	685,352
		23		Educator expenses .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .														23
Adjusted		24		Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ														24
Gross		25		Health savings account deduction. Attach Form 8889 .   .   .   .   .   .   .   .   .   .														25		0
Income		26		Moving expenses. Attach Form 3903 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .										.   .   .   .   .   .   .				26
		27		Deductible part of self-employment tax. Attach Schedule SE .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .														27		0
		28		Self-employed SEP, SIMPLE, and qualified plans .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .														28
		29		Self-employed health insurance deduction													.   .   .   .   .   .   .   .   .   .   .   .	29
		30		Penalty on early withdrawal of savings .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .														30		0
		31	a	Alimony paid							b Recipient's SSN		566-74-8765					31a		5,400
		32		IRA deduction													.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	32
		33		Student loan interest deduction						.   .   .   .   .   .   .   .   .   .   .   .   .   .   .								33
		34		Tuition and fees. Attach Form 8917													.   .   .   .   .   .   .   .   .   .   .   .   .   .   .	34
		35		Domestic production activities deduction. Attach Form 8903														35
		36		Add lines 23 through 35											.   .   .   .   .   .   .   .   .   .   .   .   .   .   .										36	5,400
		37		Subtract line 36 from line 22.									This is your adjusted gross income.										.   .   .   .   .		37	679,952
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.																						Cat. No. 11320B							Form 1040		(2017)
Form 1040 (2017)																															Page 2
Tax and		38		Amount from line 37 (adjusted gross income)													0	0		0			0		38	679,952
Credits		39	a	Check			You were born before					January 2, 1953						Blind.   Total boxes					0
Standard				if:			Spouse was born before						January 2, 1953					Blind.   checked				39a
Deduction for --			b	If your spouse itemizes on a separate return or you were a dual-status alien, check here																			39b
•	People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions.	40		Itemized deductions (from Schedule A) or your standard deduction (see left margin)																				.   .   .   .   .	40	12,700
		41		Subtract line 40 from line 38																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	41	667,252
		42		Exemptions.		If line 38 is $156,900 or less, multiply $4,050 by number on line 6d. Otherwise, see instructions.																			42	0
		43		Taxable income.			Subtract line 42 from line 41. If line 42 is more than line 41, enter -0-																	.   .   .   .   .   .	43	667,252
		44		Tax (see instructions). Check if any tax is from: a									Form(s) 8814      b					Form 4972 c							44	121,313
		45		Alternative minimum tax (see instructions). Attach Form 6251																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	45	12,916
		46		Excess advance premium tax credit repayment. Attach Form 8962																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .	46
•	All others:	47		Add lines 44, 45, and 46																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	47	134,229

	62		Taxes from: a			Form 8959 b			X	Form 8960 c		Instructions; enter code(s)												62	16,338
	63		Add lines 56 through 62.					This is your total tax															.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	63	150,567
Payments	64		Federal income tax withheld from Forms W-2 and 1099													.   .   .   .   .   .	64		0
	65		2017 estimated tax payments & amount applied from 2016 return													.	65		52,000

Amount	78		Amount you owe.																			Subtract line 74 from line 63. For details on how to pay, see instructions		78	98,567
You Owe	79		Estimated tax penalty (see instructions)													.   .   .   .   .   .   .   .   .   .	79		0