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1040 form

51. David R. and Ella M. Cole (ages 39 and 38, respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a self-employed consultant specializing in retail management, and Ella is a dental hygienist for a chain of dental clinics. David earned consulting fees of $145,000 in 2019. He maintains his own office and pays for all business expenses. The Coles are adequately covered by the medical plan provided by Ella's employer but have chosen not to participate in its $ 4010) retirement plan David's employment-related expenses for 2019 are summarized below, Airfare Lodging Meals (during travel status) Entertainment Ground transportation (eg, limos, rental cars, and taxis) Business gifts Office supplies (includes postage, overnight delivery and copying) $8,800 4,615 4,800 3,600 800 900 1,500 The entertainment Involved taking clients to sporting and musical events. The business gifts consisted of 550 gift certificates to a national restaurant. These were sent by David during the Christmas holidays to 18 of his major dients, In addition, David drove his 2017 Ford Expedition 11,000 miles for business and 5,000 for personal use during 2019. He purchased the Expedition on August 15, 2016, and has always used the automatic (standard mileage method for tax purposes. Parking and rolls relating to business use total $360 in 2019. . When the Coles purchased their present residence in April 2016, they devoted 450 of the 3,000 square feet of living space to an office for David. The property cost 4440,000 $10,000 of which is attributable to the land and has since appreciated in value. Expenses relating to the residence in 2019 (except for mortgage interest and property taxes, see below) are as follows: Insurance $2.600 Repairs and maintenance 900 Uties 4700 Painting office area rugs and plants in the office 1.800 In terms of depreciation, the Coles use the MACRS percentage tables applicable to 39-year nonresidential real property. As to depreciable property (eg, office fumiture), David tries to wold capitalization and use whatever method provides the fastest we off for six purposes - Ella works at a variety of offices as a substitute when a hygienist will or on vac tion or when one of the clinics is particularly busy (eg. prior to the beginning of the school year). Besides her transportation, she must provide and maintain her own uniforms. Her expenses for 2019 appear below. Uniforms S600 180 State and otycupational licenses Professional journals and membership dues in the American Dental Hygiene Association Correspondence study course taken online dealing with sweth whitening procedures Esary for the star to the years since halling Stone cattedralet and the propos xul Security and att Take the items are on the had the following the 140 420 in 2 Interest Income State of Colorado general purpose bonds IBM bonds Wells Fargo Bank Federal income tax refund for year 2018 Life Insurance proceeds paid by Eagle Assurance Corporation Inheritance of savings account from Sarah Cole Sales proceeds from two ATV $2,500 800 1.200 $ 4500 510 200,000 50,000 9,000 For several years, the Coles' household has included David's divorced mother, Sarah, who has been claimed as their dependent. In late December 2018, Sarah unexpectedly died of cardiac arrest in her sleep. Unknown to Ella and David, Sarah had a life insurance policy and a savings account (with David as the 310 designated beneficiary of each). In 2018, the Coles purchased two ATVs for $14,000. After several near mishaps, they decided that the sport was too danger- ous. In 2019, they sold the ATVs to their neighbor. - Additional expenditures for 2019 include: Funeral expenses for Sarah $4,500 Taxes Real property taxes on personal residence $6,400 Colorado state income tax due (paid in April 2019 for tax year 2018) 6.710 Mortgage interest on personal residence (Rocky Mountain Bank) 6,600 Paid church pledge 2,400 Contributions to traditional IRAs for Ella and David (56,000+ $6,000) 12,000 In 2019, the Coles made quarterly estimated tax payments of $6,000 (Federal) and $500 (state) for a total of $24,000 (Federal) and $2,000 (state), Using the appropriate forms and schedules, compute the Coles Federal income tax for 2019. Disregard the alternative minimum tax (AMT) and various educa- tion credits since these items are not discussed until later in the text (Chapters 12 and 18). Relevant Social Security numbers are David Cole 123-45-6788 Ella Cole 123-45-6787 The Coles have never owned or used any virtual currency They do not want to contribute to the Presidential Election Campaign Fund Also, they want any over- payment of tax refunded to them and not applied towand next year's tax liability David will have a velf employment tax liability refer to Exhibit 139 in Chapter 13 compute this liability Suggested software ProConnect Tax Online