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:
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:
Tractor June 10, 2001 $25,000 $25,000 Oct. 20 $ 8,300
Barn May 23, 1991 90,000 61,000 May 13 87,000
Land May 23, 1991 15,000 -0- May 13 27,000
Cows Sept. 7, 2009 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, 1973.
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.