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Joseph Green, age 46 and born 1/1/1972, is single. He lives at 3520 Base Lane, Tuscon, AZ 85701. His Social Security number is 406-11-1112. Joseph wants $3 to go to the Presidential Election Campaign Fund.

Joseph's wife, Becky, passed away in June 2017. Joseph's son, Gilbert, who is age 16, resides with Joseph. Gilbert's Social Security number is 405-45-6788.

Joseph owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory. His revenues and expenses for 2019 are as follows:

• Sales revenue $675,000
• Cost of goods sold (based on purchases for the year) 355,000
• Salary expense 80,000
• Rent expense 25,000
• Utilities 10,000
• Telephone 5,500
• Advertising 6,500
• Bad debts 4,000
• Depreciation * 15,000
• Health insurance ** 20,000
• Legal and professional fees 6,000
• Supplies 1,000

New office equipment ($15,000) placed in service 1/1/19; Joseph chose to use immediate expensing 179 election ** $15,000 for employees benefit plan and $5,000 for Joseph

Other income received by Joseph includes the following:

Dividend income (qualified dividends):

• Gator, Inc. $8,000
• Wrap, Inc. 2,000

Interest income:

• Fifth First Bank 8,000
• Third Bank 1,500
• City of Tuscon, AZ bonds 12,000
• During the year, Joseph and his sole proprietorship had the following property transactions:

1. Sold Biff, Inc. stock for $40,000 on March 12, 2019. He had purchased the stock on September 5, 2016, for $50,000.

2. Received an inheritance of $200,000 from his uncle, Jerry. Joseph used $125,000 to purchase Gabriel, Inc. stock on May 15, 2019, and invested $75,000 in Gold, Inc. stock on May 30, 2019.

3. Received Orange, Inc. stock worth $10,000 as a gift from his aunt, Jane, on June 17, 2019. Her adjusted basis for the stock was $6,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. Joseph sold the stock on July 1, 2019, for $25,000.

4. On July 15, 2019, Joseph sold one-half of the Gabriel, Inc. stock for $40,000.

5. Joseph was notified on August 1, 2019, that Yellow, Inc. stock he purchased from a colleague on September 1, 2018, for $42,500 had become worthless. While he perceived that the investment was risky, he did not anticipate that the corporation would declare bankruptcy.

6. On August 15, 2019, Joseph received a parcel of land in Phoenix worth $210,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth $235,000, he also received $25,000 cash. Joseph's adjusted basis for the Tucson parcel was $210,000. He originally purchased it on September 18, 2015.

7. On December 1, 2019, Joseph sold the condominium in which he had been living for the past 21 years (2859 Smallhouse Lane, Tuscon, AZ 85701) and moved into a rented townhouse. The sales price was $465,000, selling expenses were $28,500, and repair/maintenance expenses for not previously properly maintaining the property were $9,400. Joseph purchased the condominium for $200,000.

Joseph's potential itemized deductions, exclusive of the aforementioned information, are as follows:

• Medical expenses (before the 7.5% floor) $ 9,000
• Property taxes on residence 6,000
• State income taxes 3,000
• Charitable contributions 8,000
• Mortgage interest on residence 12,000
• Sales taxes paid 4,500

During the year, Joseph makes estimated Federal income tax payments of $32,000 (payments of $8,000 were made on April 15, 2019, June 15, 2019, September 15, 2019 and December 15, 2019).

REQUIRED:

THIS RETURN IS FOR 2019 -TAX LAWS IN EFFECT FOR 2019 WILL APPLY!

Compute Joseph's lowest net tax payable or refund due for 2019 assuming that he makes any available elections that will reduce the tax. The tax forms required for your computations are Forms 1040 (and Schedules 1-3), 4562, 8995, 8949 and 8824 and Schedules A, B, C, D, and SE. You are required to complete the 2019 Federal tax return using 2019 Intuit ProConnect Tax Software:

• Schedule C, line 13
• Schedule C, line 31
• Schedule D, line 7
• Schedule D, total of lines 8a through 10 - column (h) only
• Schedule D, line 11
• Schedule D, line 15
• Form 1040, line 8b
• Form 1040, line 9
• Form 1040, line 11b
• Form 1040, line 19
• Form 1040, line 20

ALL THESE MUST BE IN PDF FORMAT.

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