Christopher Crosphit age 42 owns and operates a health club

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

Telephone 2,778

Utilities (electric, water, gas) 13,975

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 and 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, 2017. Required: Complete Chris\' federal tax return for 2017. Use Form 1040, Schedule B, Schedule C, and Form 8829 to complete this tax return. Do not complete Form 4562 (depreciation). Make realistic assumptions about any missing data.

Solution

Your first name and initial    Last name Your social security number Christopher Crossfit 565-12-6789 Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above and on line 6c are correct. 4321 New Cut Road, Spartanburg, SC 29303. Filing Status and full name here. 5 x Qualifying widow(er) (see instructions) Boxes checked on 6a and 6b. 6a X Yourself. If someone can claim you as a dependent, do not check box 6a .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 1 No. of children on 6c who: Exemptions b Spouse .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 1 c Dependents: (2) Dependent\'s       (3) Dependent\'s (4)       if child under age 17 • lived with you social security      relationship to qualifying for child tax credit • did not live with If more than four (1) First name Last name number     you (see instructions) you due to divorce or separation (see instructions) dependents, see Arnold 276-23-3954 Son 0 Add numbers on lines above d Total number of exemptions claimed .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 0 2 Income 7 Wages, salaries, tips, etc. Attach Form(s) W-2 .   .   .   .   .   .   .   .   .   7 0 8 a Taxable interest. Attach Schedule B if required.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 8a 12,831 was withheld. 12 Business income or (loss). Attach Schedule C or C-EZ.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 12 (3,930) 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income         22 8,901 37 Subtract line 36 from line 22. This is your adjusted gross income.    .   .   .   .   . 37 8,901 Tax and 38 Amount from line 37 (adjusted gross income) 0 0 0 0 38   8,901 • People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. 40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) .   .   .   .   .   40 12,700 41 Subtract line 40 from line 38 .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   41 (3,799) 42 Exemptions. If line 38 is $156,900 or less, multiply $4,050 by number on line 6d. Otherwise, see instructions. 42 8,100 74 Add lines 64, 65, 66a, and 67 through 73.     These are your total payments .   .   .   .   .   .   .   74 1,000 Refund 75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75 1,000