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’s birthday is 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 Wage and Tax Statement (Form W–2) for 2013.
During 2013, 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, 2013. On her 2012 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 in 2013 totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service.
On February 8, 2013, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, 2013, she sold the stock for $14 a share.
Beth bought a used sports utility vehicle for $6,000 on June 5, 2013. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, 2013, she sold the vehicle to a friend for $6,500.
On January 2, 2013, she acquired 100 shares of Blue Corporation common stock for $30 a share. She sold the stock on December 19, 2013, for $55 a share.
During 2013, Beth received royalties of $16,000 on a software program she had written. She incurred the following expenditures in connection with her software-writing activities:
Cost of personal computer ......... $7,000
Cost of printer .............. 2,000
Office furniture .............. 3,000
Supplies .................. 650
Fee paid to computer consultant ....... 3,500
Beth elected to expense 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, 2013, and used 100% in her business. Although her employer suggested that Beth attend a convention on current developments in corporate taxation, she was not reimbursed for the travel expenses of $1,420 she incurred in attending the convention. The $1,420 included $200 for the cost of meals. During 2013, Beth paid $300 for prescription medicines and $2,875 for doctor bills and hospital bills. Medical insurance premiums were paid for her by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage was $3,845, and interest to credit card companies was $320. She contributed $30 each week to her church and $10 each week to the United Way. Professional dues and subscriptions totaled $350. Beth maintained her sales tax receipts. The total is $1,954. Beth paid estimated Federal income taxes of $1,000.
Part 1—Tax Computation