Lou and Joann Girardi are married and file a joint return. They recently bought a new home on 21680 Skyline Drive, Henderson, NV 89077. Their son, Stuart, attends the University of Pennsylvania full-time on a full scholarship. Stuart is claimed as a dependent on the Girardis’ tax return. Their SSNs are Lou, 412-34-5670; Joann, 412-34-5671; and Stuart, 412-34-5672. Their birth dates are as follows: Lou, May 18, 1964; Joann, December 24, 1964; and Stuart, May 9, 1997. Their relevant tax information follows:

Joann is an attorney and owns her law firm, which is operating as an S corporation. Her W-2 information and Schedule K-1 from her law firm are as follows:

 

Wages (box 1)	=	$	114,800.50
Federal W/H (box 2)	=	$	15,000.14
Social security wages (box 3)	=	$	114,800.50
Social security W/H (box 4)	=	$	7,117.63
Medicare wages (box 5)	=	$	114,800.50
Medicare W/H (box 6)	=	$	1,664.61

 

Schedule K-1 from the law offices of Joann Girardi:	Girardi - Attorney at Law
	ID # 12-3456789
	100% Owner
	Material participation – yes

Line 1   =  $22,582.00 (ordinary business income)
Line 11 =  $22,582.00 (§ 179 deduction)

Lou is a full-time lecturer at Arizona State University. His W-2 information from ASU is as follows:

 

Wages (box 1)	=	$	65,000.00
Federal W/H (box 2)	=	$	9,950.25
Social security wages (box 3)	=	$	65,000.00
Social security W/H (box 4)	=	$	4,030.00
Medicare wages (box 5)	=	$	65,000.00
Medicare W/H (box 6)	=	$	942.50

  

The following are other income and expenses they received and incurred during the year:

 

Income
Dividend (qualified)	$	666
Interest		765
Expenses
Real estate taxes		7,836
State sales tax		1,629
Mortgage interest		32,562
Charitable contribution		2,598

Prepare the Girardis’ federal tax return for 2017. Use Form 1040, and Schedules A, B, and E. Assume that the Girardis do not qualify for any credits (although they may). For any missing information, make reasonable assumptions. The taxpayers had qualifying health care coverage at all times during the tax year. (Assume no AMT although it may apply; Form 6251 or the AMT calculation is not required.)  (List the names of the taxpayers in the order in which they appear in the problem. Do not round intermediate computations. Input all the values as positive numbers. Instructions can be found on certain cells within the forms. Round your final answers to nearest the nearest whole dollar amount.)

 

Use the appropriate Tax Tables or Tax Rate Schedules. 

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Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: 10% of taxable income $1,865.00 plus 15% of the excess over $18,650 $10.452.50 plus 25% of the excess over $75,900 $29,752.50 plus 28% of the excess over $153,100 $52,222.50 plus 33% of the excess over $233,350 $112,728.00 plus 35% of the excess over $416,700 $131,628.00 plus 39.6% of the excess over $470,700 $0 $18,650 $75,900 $18,650 $75,900 $153,100 $233,350 $416,700 $470,700 $153,100 $233,350 $416,700 $470,700 Schedule Y-2-Married Filing Separately Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: 10% of taxable income $1,865.00 plus 15% of the excess over $18,650 $10.452.50 plus 25% of the excess over $75,900 $29,752.50 plus 28% of the excess over $153,100 $52,222.50 plus 33% of the excess over $233,350 $112,728.00 plus 35% of the excess over $416,700 $131,628.00 plus 39.6% of the excess over $470,700 $0 $18,650 $75,900 $18,650 $75,900 $153,100 $233,350 $416,700 $470,700 $153,100 $233,350 $416,700 $470,700 Schedule Y-2-Married Filing Separately