Question

Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Karl lives with Ashley, and she fully supports him. Bill spent 2018 traveling in Europe and was not a college student. He had gross income of $4,655 in 2018. Bill paid $4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the $4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2018, and many of her expenses were not reimbursed by her health insurance.

Ashley owns Panda Enterprises LLC (98-7654321), a data processing service that she operates as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2018 Form 1040, Schedule C for Panda Enterprises shows revenues of $315,000, office expenses of $66,759, employee salary of $63,000, employee payroll taxes of $4,820, business meal expenses (before the 50% reduction) of $22,000, and rent expense of $34,000. The rent expense includes payments related to renting an office ($30,000) and payments related to renting various equipment ($4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Ashley personally purchases health insurance on herself and Bill. The premiums are $23,000 per year.

Ashley has an extensive stock portfolio and has prepared the following analysis:

Stock	Number of Shares	Date Purchased	Date Sold	Per-Share Cost	Per-Share Selling Price	Total Dividends
Beige	10	10/18/17	10/11/18	$80	$   74	$30
Garland	30	10/11/11	10/11/18	43	157	70
Peach	15	3/10/18	8/11/18	62	33	45

Note: Ashley received a Form 1099–B from her stockbroker that included the adjusted basis and sales proceeds for each of her stock transactions. The per-share cost includes commissions, and the per-share selling price is net of commissions. Also, the dividends are the actual dividends received in 2018, and these are both ordinary dividends and qualified dividends.

Ashley had $800 of interest income from State of Ohio bonds and $600 of interest income on her Wayne Savings Bank account. She paid $25,000 of alimony to her former husband. His Social Security number is 123-45-6788.

Ashley itemizes her deductions and provides the following information, which may be relevant to her return:

Item	Amount	Comment
Unreimbursed medical expenses for Ashley	$11,786	Does not include health insurance premiums.
State income taxes paid	1,830
Real property taxes on personal residence	3,230
Interest paid on home mortgage (Form 1098)	8,137	The loan is secured by the residence and was incurred when the home was purchased.
Charitable contributions	1,399	$940 cash payments to Ashley’s church and $459 cash payments made to homeless persons for whom she felt sorry. She can document all the expenditures.
Sales taxes	619	Amount per sales tax table.

Ashley made a $26,000 estimated Federal income tax payment, does not want any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2019 taxes.

Compute Ashley’s net tax payable or refund due for 2018. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 2, 3, A, C, D, and SE and Form 8949 Part 1(B) & Part 2(E); worksheet line 12a. Ashley qualifies for the § 199A deduction for qualified business income. Be sure to include that in your calculations. Suggested software: ProConnect Tax Online.

Forms needed: 1040 pages 1 and 2; Schedules 1, 2, 3, A, C, D; Form 8949 Part 1(B) and Part 2(E); Schedule SE p. 1; worksheet line 12a.

United States tax is applicable

Answer 1

Ashley son's income $4655
Business income
Revenue		$ 315000
office expenses	$ 66759
employee salary	$ 63000
employee payroll taxes	$ 4820
business meal expenses	$ 11000
Rent exp.	$ 34000
EquipmentRent	4000	183579
Net profit from business		$ 131421
Income froms hare activities		$ 3070
intrest income
Ohio bonds	$ 800
Wayne Savings Bank account	$ 600	1400
Total income		135891
less - deduction
Health insurance premium	$ 23000
alimony to her former husband	$ 25000
Unreimbursed medical expenses	$ 11786
State income taxes	$ 1830
Real property taxes	$ 3230
Interest paid on home mortgage	$ 8137
cash payments to Ashley’s church	$ 940
Sales taxes	$ 619
Total deduction	$ 74542	$ 74542
Taxaxble income		$ 61349

profit / loss of Beige = purchasecost - selling cost -dividend

= (10*80) - (10*74) - 30

=800- 740 -30

= 60 -30

= 30 loss

profit / loss of Garland = purchasecost - selling cost -dividend

= (30*43) - (30*157) -70

= (1290 - 4710) -70

= -3420 -70

= 3490 profit

profit / loss of Peach = purchasecost - selling cost -dividend

= (15*62) - (15*33) - 45

=(930 - 495) -45

= 390 loss

total profit = 3490 - 390 - 30 = 3070