Question

Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice’s parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election Campaign Fund.

During 2018, Janice reported the following income and expense items connected with her business.

Income from sale of articles	$85,000
Rent	16,500
Utilities	7,900
Supplies	1,800
Insurance	5,000
Travel (including meals of $1,200)	3,500

Janice purchased and placed in service the following fixed assets for her business. Janice wants to elect immediate expensing under § 179, if possible.

• Furniture and fixtures (new) costing $21,000 on January 10.
• Computer equipment (new) costing $12,400 on July 28.

Janice’s itemized deductions include:

State income tax	$2,950
Home mortgage interest paid to First National Bank	6,000
Property taxes on home	2,500
Charitable contribution to her alma mater, State College	1,200

Janice did not keep a record of the sales tax she paid. The amount from the sales tax table is $437.

Janice reports interest income of $4,000 on certificates of deposit at Second National Bank. Janice makes estimated tax payments of $3,000 for 2018.

Adjusted gross income 20,263 Itemized deductions 12,650

Taxable income 6,090

Compute Janice Morgan’s 2018 Federal income tax payable (or refund due). If you use tax forms for your computations, you will need Forms 1040 Schedule B and C

SCHEDULE B (Form 1040) Department of the Tre OMB No. 1545-0074 Interest and Ordinary Dividends 2018 Go to www.irs.gov/ScheduleB for instructions and the latest information. Attach to Form 1040. Attachment Internal Revenue Service uence No. 08 Name(s) shown on return Your social security number Part I 1 Amount List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address Interest (See instructions and the instructions for Form 1040 line 2b.) Note: If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 3 Excludable interest on series EE and I U.S. savings bonds issued after 1989 4 Subtract line 3 from line 2. Enter the result here and on Form 1040, line 2b 5 List name of payer Note: If line 4 is over $1,500, you must complete Part Ill Amount Part II Ordinary Dividends (See instructions and the instructions for Form 1040 line 3b.) 5 Note: If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. Add the amounts on line 5. Enter the total here and on Form 1040, line 3b Note: If line 6 is over $1,500, you must complete Part Ill You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust Part IIl Yes No Foreign Accounts and Trusts 7a At any time during 2018, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign If "Yes," are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements.. . (See instructions.) b If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial account is located During 2018, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If "Yes," you may have to file Form 3520. See instructions 8 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040) 2018

Answer 1

SoJut oge 2u, income tox Pa^ able iS L650 meH 3000 neta pouable Por 2016 corking no ; ver income Cal alated Income ,Yom S 3500 12.00

650 com eauipment Tora (10χση Sele employemeb tlb,] emplouement tad