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:
Ac€?c Schedule C was prepared by her accountant and the net profit from the dairy operations is $48,000.
Ac€?c Itemized deductions amount to $4,185.
Ac€?c Dividend income (qualified dividend) amounts to $280.
Ac€?c State income tax refund received during the year is $125. She did not itemize last year.
Ac€?c In June, a burglar broke into her house and stole the following two assets, which were
acquired in 1988:

Painting: Basis-$2,000

FMV-$10,000

Insurance Proceeds Received-$9,000

Sculpture: Basis-1,700

FMV-1,500

Insurance Proceeds Received-0

The following assets used in her business were sold during the year:

Tractor: Acquisition Date-June 10, 2002

Original Cost-$25,000

Depreciation to Date of Sale-$25,000

Date of Sale-Oct. 20

Selling Price-$8,300

Barn: Acquisition Date-May 23, 1992

Original Cost-90,000

Depreciation to Date of Sale-61,000                        

Date of Sale-May 13

Selling Price-87,000

Land: Acquisition Date-May 23, 1992

Original Cost-15,000                       

Depreciation to Date of Sale:Ac€?o0Ac€?o                             

Date of Sale-May 13

Selling Price-27,000

Cows: Acquisition Date-Sept. 7, 2010

Original Cost-20,000

Depreciation to Date of Sale-13,000

Date of Sale-Nov. 8

Selling Price-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. (Do
not consider self-employment taxes)