Prepare forms 1040 and schedule d for the current year

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Reference no: EM13544294

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 2013:

• 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:

                     Basis        FMV        Insurance Proceeds Received

Painting      $2,000    $10,000                         $9,000
Sculpture    $1,700     $1,500                           $0

The following assets used in her business were sold during the year:
                 Acquisition Date      Original Cost      Depreciation to date of Sale       Date of Sale     Selling Price

Tractor     June 10, 2003          $25,000                          $25,000                                 Oct. 20               $ 8,300
Barn           May 23, 1993           $90,000                          $61,000                               May 13             $87,000
Land              May 23, 1993       $15,000                            -0-                                      May 13                $27,000
Cows            Sept. 7, 2011          $20,000                      $13,000                                   Nov. 8                 $21,000

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, 1975.

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 for the current year. Do not consider self-employment taxes.

Reference no: EM13544294


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