Question

Comprehensive Problem 3-2B Christopher Crosphit (age 42) owns and operates a health club called "Catawba Fitness". The business is located at 4321 New Cut Road, Spartanburg, SC 29303. The principal business code is 812190. Chris had the following income and expenses from the health club: Income $216,100 Expenses: Business insurance 3,665 Office supplies 3,295 Payroll 98,900 Payroll taxes 9,112 Travel 2,420 Equipment & club maintenance 10,720 Cleaning service 8,775 Equipment rent 22,820 Utilities (electric, water, gas) 13,975 Telephone 2,778 Rent 32,590 Advertising 5,200 Special workout clothing and boxing gloves 780 Subscription to Biceps Monthly magazine 120 Educational seminar on weight training 770 Other expenses 1,830 The business uses the cash method of accounting and has no accounts receivable or inventory held for resale. Chris has the following interest income for the year: Upper Piedmont Savings Bank savings account $12,831 Morgan Bank bond portfolio interest 12,025 (You may assume that the bond portfolio interest is from corporate bonds.) Chris has been a widower for 10 years with a dependent son, Arnold (Social Security number 276-23-3954), and he files his tax return as head of household. Arnold is an 18-year-old high school student; he does not qualify for the child tax credit. They live next door to the health club at 4323 New Cut Road. Chris does all the administrative work for the health club out of an office in his home. The room is 171 square feet and the house has a total of 1,800 square feet. Chris pays $20,000 per year in rent and $4,000 in utilities. Chris' Social Security number is 565-12-6789. He made an estimated tax payment to the IRS of $1,000 on April 15, 2017. Required: Complete Form 1040 for Chris and the other schedules and forms provided. Do not complete Form 4562 (depreciation). Make realistic assumptions about any missing data. If required, enter a "loss" as a negative number on the tax form. Do not enter deductions or other amounts as negative numbers. If an amount box does not require an entry or the answer is zero, enter "0". Round any percentages to two decimal places. Round any dollar amounts to the nearest dollar.

Answer 1

	Your first name and initial							Last name															Your social security number
Christopher								Crossfit															565-12-6789
	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.
4321 New Cut Road, Spartanburg, SC 29303.
Filing Status				and full name here.														5	x	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 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																									1
																										No. of children on 6c who:
Exemptions		b		Spouse .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																											1
		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			Arnold										276-23-3954				Son								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	12,831
was withheld.		12		Business income or (loss). Attach Schedule C or C-EZ.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					12	(3,930)
		22		Combine the amounts in the far right column for lines 7 through 21.														This is your total income							22	8,901
		37		Subtract line 36 from line 22.									This is your adjusted gross income.										.   .   .   .   .		37	8,901
Tax and		38		Amount from line 37 (adjusted gross income)													0	0		0			0		38	8,901
•	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	(3,799)
		42		Exemptions.		If line 38 is $156,900 or less, multiply $4,050 by number on line 6d. Otherwise, see instructions.																			42	8,100
		74		Add lines 64, 65, 66a, and 67 through 73.									These are your				total payments						.   .   .   .   .   .   .		74	1,000
	Refund	75		If line 74 is more than line 63, subtract line 63 from line 74.													This is the amount you overpaid								75	1,000