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.

Form 4562

Complete Form 4562 for Beth for 2016. Note: The threshold cost of Section 179 property before any reduction limitation is $2,010,000 for 2016.

Form 4562 Department of the Treasury Internal Revenue Service (99)	Depreciation and Amortization (Including Information on Listed Property) ? Attach to your tax return. ? Information about Form 4562 and its separate instructions is at www.irs.gov/form4562.	OMB No. 1545-0172
		2016 Attachment Sequence No. 179

Name(s) shown on return BETH R JORDON

Business or activity to which this form relates SCH C 2

Identifying number 123-45-6789

Part I	Election To Expense Certain Property Under Section 179
	Note: If you have any listed property, complete Part V before you complete Part I.

1	Maximum amount (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					1
2	Total cost of section 179 property placed in service (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					2
3	Threshold cost of section 179 property before reduction in limitation (see instructions) . . . . . . . . . . . . . . . . . . . . .					3
4	Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					4
5	Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					5
6	(a) Description of property	(b) Cost (business use only)		(c) Elected cost
	COMPUTER
	All other assets
7	Listed property. Enter the amount from line 29 . . . . . . . . . . . . . . . . . . . . . . . . . .		7
8	Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 . . . . . . . . . . . . . . . . . . . . . .					8
9	Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					9
10	Carryover of disallowed deduction from line 13 of your 2015 Form 4562 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .					10
11	Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions)					11
12	Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 . . . . . . . . . . . . . . . . . . .					12
13	Carryover of disallowed deduction to 2017. Add lines 9 and 10, less line 12 . . . . .		?	13
Note: Don't use Part II or Part III below for listed property. Instead, use Part V.

Part II

Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.)

14	Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
15	Property subject to section 168(f)(1) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
16	Other depreciation (including ACRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

Part III	MACRS Depreciation (Don't include listed property.) (See instructions.)
Section A

17	MACRS deductions for assets placed in service in tax years beginning before 2016 . . . . . . . . . . . . . . . . . . . . . . .	17
18	If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? ?
Section B—Assets Placed in Service During 2016 Tax Year Using the General Depreciation System

(a) Classification of property		(b) Month and year placed in service	(c) Basis for depreciation (business/investment use only—see instructions)	(d) Recovery period	(e) Convention	(f) Method	(g) Depreciation deduction
19a	3-year property
b	5-year property
c	7-year property
d	10-year property
e	15-year property
f	20-year property
g	25-year property			25 yrs.		S/L
h	Residential rental property			27.5 yrs.	MM	S/L
				27.5 yrs.	MM	S/L
i	Nonresidential real property			39 yrs.	MM	S/L
					MM	S/L
Section C—Assets Placed in Service During 2016 Tax Year Using the Alternative Depreciation System
20a	Class life					S/L
b	12-year			12 yrs.		S/L
c	40-year			40 yrs.	MM	S/L

Part IV

Summary (See instructions.)

21	Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			21
22	Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations—see instructions . . . . . . . . . . . . . . . . . .			22
23	For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

KIA

For Paperwork Reduction Act Notice, see separate instructions.

Form 4562 (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

Calculation of Income Tax Payable
Particulars	Detail	Amounts($)	Working
Salary		65000
Interest on saving	1300
interest from bank	400
Dividend from B stock	800
Dividend from g stock	750
dividend from o stock	650	3900
State income tax refund		1100
short term cap. Gain		1200	Working note 1
bussiness income		19800
Gross income		91000
less-: Deductions
bussiness expenses		-16750	working note 3
Self employment tax deduction		-216	working note 4
Adjusteed gross total income		74034
less-: from deduction
itemized deductions or standred deduction whichever is grater		-9834	working note 5
Personal and dependency exemption deduction		3900	working note 6
Taxable income		60300
Tax		10784	working note 7
self employed tax		431	working note 8
Total Tax liablity		11215
Less-: Tax withholding by emplooyer		10250
Estimated taxes		1000
Net tax payable		285

Particulars	No. of shares	sales price	Total sales($)
	(A)	(B)	(A)x(B)
Corporation G	500	14	7000
Sport utility vehicles			6500
Corporation B	100	55	5500
Total		(E)	19000
PaRticulars	No.of shares	Purchase cost	total puirchase($)
	©	(D)	(C )x(D)
Corporation G	500	17.6	8800
Sport utility vehicles			6000
Corporation B	100	30	3000
Total		(F)	17800
NET short term cap gain		(E)-(F)	19000-17800 =1200

Working note -:3
Particulars	Amounts($)
Cost of personal computer (100% business use)	7,000
Cost of printer (100% business use)	2000
furnitures	3000
supplies	650
Fee paid to computer consultant	3500
Processing fees	600
Total business expenses	16750

working note 4
Computation of self assesment tax deduction
step 1- Compute earnings-
Detail	Amount($)
Business income	19800
Business expenses	16750
earnings	3050
step - excess of security portion over FICA
Particulars	amounts($)
Social security ceiling	113700
less-: weges	65000
Net ceiling	48700
step 4-. Medicare tax lsser step 2 or 3
medicare tax=Net employed incomex tax rate
2817x2.9% = $82
step 5- toatl self employed tax
social security tax =	349
medicare tax	82
self employed tax	431
step 6- self employed tax deduction amount
self employed tax x 50%
$431x50%=$216