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 

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, 2018. 

Required: Complete Chris’ federal tax return for 2018 on Form 1040, Schedule 1, Schedule 5, Schedule B, Schedule C, and Form 8829 Do not complete Form 4562 (depreciation).

Answer rating: 100% (QA)

Christopher Crosphit hereafter referred to as Chris has to file a federal tax return for the tax year 2018 The forms and schedules that he needs to fi... View the full answer