|| Instructor Guide Included
|| Solutions Manual Included
—————————————————————
|| All Chapters Included
|| Latest Edition - 2026
,“ This Page Intentionally Left Blank ”
, Solution and Answer Guide: Young, Persellin, Nellen, Cuccia, Lassar, Maloney, Cripe, SWFT Comprehensive Volume
2026, 9798214043753; Appendix F: Practice Set Assignments—Comprehensive Tax Return Problems
Solution and Answer Guide
YOUNG, PERSELLIN, NELLEN, CUCCIA , LASSAR, MALONEY, CRIPE, SWFT COMPREHENSIVE
VOLUME 2026, 9798214043753; APPENDIX F: PRACTICE SET ASSIGNMENTS—COMPREHENSIVE
TAX RETURN PROBLEMS
TABLE OF CONTENTS
Problem 1 Solutions ............................................................................................................... 1
Problem 2 Solutions ............................................................................................................. 7
PROBLEM 1 SOLUTIONS
1. Michael is self-employed and reports his business income on Schedule C. Both his
consulting fees and his expense reimbursements are reported on Line 1.
Line 1: Gross receipts [$92,800 consulting fees + $17,820 expense
reimbursements + $7,000 Stewart Mining fee (see item 2)] $117,620
The travel expenses of $16,070 are deducted as follows:
Line 24a: Travel (airfare $8,200 + lodging $5,200 + transportation $920) $14,320
Line 24b: Meals [$3,500 – disallowed portion (50% $3,500)] 1,750
2. Because Michael is a cash basis taxpayer, the $7,000 received from Stewart Mining in
2024 is included in gross receipts on Schedule C. The Granger Mining transaction has
no effect on the 2024 tax return. There is no income because no payment is received,
and there is no bad debt deduction because Michael has no basis in the receivable.
The $5,100 received from Holliday will be taxable in 2025.
3. The $9,000 contribution to the H.R.10 Keogh retirement plan and the $3,800 of
premiums on health insurance are not reported on Schedule C but are deducted on
Schedule 1, Lines 16 and 17, respectively. The remaining expense are deducted on
Schedule C as follows:
Line 8: Advertising $2,400
Line 18: Office expenses 1,200
Line 22: Supplies 3,200
Line 23: State occupation license 300
Line 27a (also listed separately on page 2, Part V):
Business phone and Internet service $860
Subscriptions to trade journals 240
Membership dues to trade associations 180 1,280
© 2026 1
.
, Solution and Answer Guide: Young, Persellin, Nellen, Cuccia, Lassar, Maloney, Cripe, SWFT Comprehensive Volume
2026, 9798214043753; Appendix F: Practice Set Assignments—Comprehensive Tax Return Problems
4. The home office deduction is computed on Form 8829. The portion of the home used
for business is computed in Part I to be 20%, which is the square footage of the home
office relative to the area of the entire home. Part II of the form tallies the expenses
related to the home office. The direct expense of $1,200 spent to paint the home
office is reported on Line 20a. The remaining expenses are considered indirect because
they relate to the entire home and must be apportioned to the office.
Line 11b: Real estate taxes (see item 15) $ 5,800
Line 18b: Insurance 2,300
Line 20b: Repairs and maintenance 2,900
Line 21b: Utilities 4,800
Total indirect expenses $15,800
× Business percentage 20%
Business portion $ 3,160
Depreciation is computed in Part II to be $1,846 ($360,000 × 20% × 2.564%). The
depreciable basis of the home is the lesser of current fair market value of the home
(the land is disregarded) or Michael’s inherited basis (fair market value on the father’s
date of death). The 20% represents the portion of the home used for business
purposes, and the depreciation rate of 2.564% is the applicable percentage for 39-year
nonresidential real property for the 8th recovery period.
The Stovers deduct the $4,800 cost of the file cabinet by claiming the § 179 expense.
This election is made by completing Part I of Form 4562 to claim a deduction on Line 12.
5. MACRS depreciation on the SUV, reported on Part V of Form 4562, is computed using
the half-year convention because the SUV was acquired and placed in service in
February 2023. The depreciation deduction is computed as follows:
Cost $41,000
× Business use 90%
= Basis for depreciation $36,900
× Second year percentage for 5-year property × 32%
= Tentative depreciation deduction $ 1 1 ,808
SUVs that weigh less than 6,000 pounds are considered passenger automobiles.
Because the 2024 limit on depreciation for passenger automobiles placed in service in
2023 is $19,500 (see Table 2 in the instructions to Form 4562), the computed
deduction of $11,808 for depreciation is not limited. This depreciation is combined with
the deduction for the file cabinet (see item 4), and the $16,608 total ($4,800 + $11,808)
is reported on Line 13 of Schedule C.
Under the actual cost method of computing automobile expenses, $5,390 ($4,950 +
$440) is deducted as car and truck expenses on Line 9 of Schedule C. The $4,950 is
the sum of prorated expenses related to the 90% business use of the vehicle [gasoline
($3,300), auto insurance ($1,600), repairs ($240), auto club dues ($180), oil changes and
lubrication ($120), and license and registration ($60)]. The $440 is the total of the toll
and parking charges paid by Michael in the conduct of his business. Note that traffic
fines for moving violations are not deductible.
© 2026 2
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|| Solutions Manual Included
—————————————————————
|| All Chapters Included
|| Latest Edition - 2026
,“ This Page Intentionally Left Blank ”
, Solution and Answer Guide: Young, Persellin, Nellen, Cuccia, Lassar, Maloney, Cripe, SWFT Comprehensive Volume
2026, 9798214043753; Appendix F: Practice Set Assignments—Comprehensive Tax Return Problems
Solution and Answer Guide
YOUNG, PERSELLIN, NELLEN, CUCCIA , LASSAR, MALONEY, CRIPE, SWFT COMPREHENSIVE
VOLUME 2026, 9798214043753; APPENDIX F: PRACTICE SET ASSIGNMENTS—COMPREHENSIVE
TAX RETURN PROBLEMS
TABLE OF CONTENTS
Problem 1 Solutions ............................................................................................................... 1
Problem 2 Solutions ............................................................................................................. 7
PROBLEM 1 SOLUTIONS
1. Michael is self-employed and reports his business income on Schedule C. Both his
consulting fees and his expense reimbursements are reported on Line 1.
Line 1: Gross receipts [$92,800 consulting fees + $17,820 expense
reimbursements + $7,000 Stewart Mining fee (see item 2)] $117,620
The travel expenses of $16,070 are deducted as follows:
Line 24a: Travel (airfare $8,200 + lodging $5,200 + transportation $920) $14,320
Line 24b: Meals [$3,500 – disallowed portion (50% $3,500)] 1,750
2. Because Michael is a cash basis taxpayer, the $7,000 received from Stewart Mining in
2024 is included in gross receipts on Schedule C. The Granger Mining transaction has
no effect on the 2024 tax return. There is no income because no payment is received,
and there is no bad debt deduction because Michael has no basis in the receivable.
The $5,100 received from Holliday will be taxable in 2025.
3. The $9,000 contribution to the H.R.10 Keogh retirement plan and the $3,800 of
premiums on health insurance are not reported on Schedule C but are deducted on
Schedule 1, Lines 16 and 17, respectively. The remaining expense are deducted on
Schedule C as follows:
Line 8: Advertising $2,400
Line 18: Office expenses 1,200
Line 22: Supplies 3,200
Line 23: State occupation license 300
Line 27a (also listed separately on page 2, Part V):
Business phone and Internet service $860
Subscriptions to trade journals 240
Membership dues to trade associations 180 1,280
© 2026 1
.
, Solution and Answer Guide: Young, Persellin, Nellen, Cuccia, Lassar, Maloney, Cripe, SWFT Comprehensive Volume
2026, 9798214043753; Appendix F: Practice Set Assignments—Comprehensive Tax Return Problems
4. The home office deduction is computed on Form 8829. The portion of the home used
for business is computed in Part I to be 20%, which is the square footage of the home
office relative to the area of the entire home. Part II of the form tallies the expenses
related to the home office. The direct expense of $1,200 spent to paint the home
office is reported on Line 20a. The remaining expenses are considered indirect because
they relate to the entire home and must be apportioned to the office.
Line 11b: Real estate taxes (see item 15) $ 5,800
Line 18b: Insurance 2,300
Line 20b: Repairs and maintenance 2,900
Line 21b: Utilities 4,800
Total indirect expenses $15,800
× Business percentage 20%
Business portion $ 3,160
Depreciation is computed in Part II to be $1,846 ($360,000 × 20% × 2.564%). The
depreciable basis of the home is the lesser of current fair market value of the home
(the land is disregarded) or Michael’s inherited basis (fair market value on the father’s
date of death). The 20% represents the portion of the home used for business
purposes, and the depreciation rate of 2.564% is the applicable percentage for 39-year
nonresidential real property for the 8th recovery period.
The Stovers deduct the $4,800 cost of the file cabinet by claiming the § 179 expense.
This election is made by completing Part I of Form 4562 to claim a deduction on Line 12.
5. MACRS depreciation on the SUV, reported on Part V of Form 4562, is computed using
the half-year convention because the SUV was acquired and placed in service in
February 2023. The depreciation deduction is computed as follows:
Cost $41,000
× Business use 90%
= Basis for depreciation $36,900
× Second year percentage for 5-year property × 32%
= Tentative depreciation deduction $ 1 1 ,808
SUVs that weigh less than 6,000 pounds are considered passenger automobiles.
Because the 2024 limit on depreciation for passenger automobiles placed in service in
2023 is $19,500 (see Table 2 in the instructions to Form 4562), the computed
deduction of $11,808 for depreciation is not limited. This depreciation is combined with
the deduction for the file cabinet (see item 4), and the $16,608 total ($4,800 + $11,808)
is reported on Line 13 of Schedule C.
Under the actual cost method of computing automobile expenses, $5,390 ($4,950 +
$440) is deducted as car and truck expenses on Line 9 of Schedule C. The $4,950 is
the sum of prorated expenses related to the 90% business use of the vehicle [gasoline
($3,300), auto insurance ($1,600), repairs ($240), auto club dues ($180), oil changes and
lubrication ($120), and license and registration ($60)]. The $440 is the total of the toll
and parking charges paid by Michael in the conduct of his business. Note that traffic
fines for moving violations are not deductible.
© 2026 2
.
