Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon does not want 3 to go to the Presidential Election Campaign Fund. Devons wife, Ariane, passed away in 2014. Devons son, Tom, who is age 18, resides with Devon. Toms Social Security number is 123-45-6788. Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory; the business operates as Devons Copy Shop, 422 E. Main Street, Albuquerque, NM 87131, IRS business activity code: 453990. His revenues and expenses for 2018 are as follows. Other income received by Devon includes the following. During the year, Devon and his sole proprietorship were involved in the following property transactions. Stock transactions were reported to Devon on Form 1099B; basis was not reported to the IRS. a. Sold Blue, Inc. stock for 45,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for 50,000. b. Received an inheritance of 300,000 from his uncle, Henry. Devon used 200,000 to purchase Green, Inc. stock on May 15, 2018, and invested 100,000 in Gold, Inc. stock on May 30, 2018. c. Received Orange, Inc. stock worth 9,500 as a gift from his aunt, Jane, on June 17, 2018. Her adjusted basis for the stock was 5,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. Devon sold the stock on July 1, 2018, for 22,000. d. On July 15, 2018, Devon sold one-half of the Green, Inc. stock for 40,000. e. Devon was notified on August 1, 2018, that Yellow, Inc. stock he purchased from a colleague on September 1, 2017, for 52,500 had become worthless. Although he understood that investing in Yellow was risky, Devon did not anticipate that the corporation would declare bankruptcy. f. On August 15, 2018, Devon received a parcel of land in Phoenix worth 220,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth 245,000, he also received 25,000 cash. Devons adjusted basis for the Tucson parcel was 210,000. He originally purchased it on September 18, 2015. g. On December 1, 2018, Devon sold the condominium in which he had been living for the past 20 years (1844 Lighthouse Lane, Albuquerque, NM 87131) and moved into a rented townhouse. The sales price was 480,000, selling expenses were 28,500, and repair expenses related to the sale were 9,400. Devon purchased the condominium for 180,000. Devons potential itemized deductions, exclusive of the aforementioned information, are as follows. During the year, Devon makes estimated Federal income tax payments of 35,000. Compute Devons lowest net tax payable or refund due for 2018 assuming that he makes any available elections that will reduce the tax. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 4, 5, A, B, C, D, and SE and Forms 4562, 8824, and 8949. Suggested software: ProConnect Tax Online.
