Julie Hernandez is single and has no dependents. She operates a dairy farm and her Social Security number is 000-00-1111. She lives at 1325 Vermont Street in Costa, Florida. Consider the following information for the current year:

• Schedule C was prepared by her accountant and the net profit from the dairy operations is $48,000.

• Itemized deductions amount to $4,185.

• Dividend income (qualified dividend) amounts to $280.

• State income tax refund received during the year is $125. She did not itemize last year.

• In June, a burglar broke into her house and stole the following two assets, which were acquired in 1988:

The following assets used in her business were sold during the year:

In August, three acres of the farm were taken by the state under the right of eminent domain for the purpose of building a highway. The basis of the three acres is $1,500, and the state paid the FMV, $22,000, on February 10. The farm was purchased on August 12, 1986. Nonrecaptured net Section 1231 losses from the five most recent tax years preceding the current year amount to $7,000. Estimated taxes paid during the year amount to $32,000.

Prepare Forms 1040, 4684 Section A, 4797, and Schedule D. 

Transcribed Image Text:

Basis FMV Insurance Proceeds Received $9,000 Painting Sculpture $2,000 1,700 $10,000 1,500