- Christopher Crosphit (birthdate April 28, 1977) 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 and the EIN is 12-3456789. Chris had the following income and expenses from the health club:
Income$216,000Expenses: Business insurance3,600 Office supplies3,300 Payroll98,900 Payroll taxes9,112 Travel2,420 Equipment & club maintenance10,720 Cleaning service8,775 Equipment rent22,820 Utilities (electric, water, gas)13,975 Telephone2,778 Rent32,600 Advertising5,200 Special workout clothing and boxing gloves780 Subscription to Biceps Monthly magazine120 Educational seminar on weight training770 Other expenses1,830The 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$13,000Morgan Bank bond portfolio interest12,075Chris also dabbles as a broker of antique and rare books. He acquires and scavenges for books and then sells them on the Internet. He generated $4,000 of sales in 2019 and the books he sold cost $3,500. He also incurred $7,600 in travel and other expenses related to this activity. Chris has never turned a profit in the book business, but he loves books and book selling and does not mind losing money doing it.
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 (birthdate July 1, 2001) is a high school student; he does not qualify for the child tax credit but does qualify for the $500 other dependent 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 $500 on April 15, 2019.
Required: Complete Chris’ federal tax return for 2019 on Form 1040, Schedule 1, Schedule 3, Schedule B, Schedule C, and Form 8829. Do not complete Form 4562 (depreciation).