Analyze each scenario presented below:

Scenario 1

David is a businessman and has the following transaction during the year 2022:

(Amount in $) Sales 185,000.00 Purchases 35,500.00 Final inventory 10,750.00 Beginning inventory 25,000.00 Salaries 9,200.00 Payroll expenses 2,790.00 Repair and maintenance 3,860.00 Insurance Expenses 5,080.00 Rent Expense 8,500.00 Utilities Expenses 4,380.00 Advertising Expenses 9,300.00 Professional Fee Expenses 8,900.00 During 2022, David, 35 years old, paid $11,375 in estimated payments and $10,150 for social security.

His 34-year-old wife earned $45,500 and $2,550 in income withholding.

In 2022 they opened an IRA account for $6,000 each.

Your task is to guide David through the process of completing Form 1040 and Schedule C based on the financial data provided for the year 2022.

Follow these steps:

1. Income Section of (Form 1040): Enter David's sales and purchases and calculate his gross income. Consider opening and closing inventory to determine cost of goods sold. Add up all the sources of income and calculate David's total income.

2. Expense Section (Annex C): List and categorize business expenses, including salaries, payroll expenses, repair and maintenance, insurance, etc. rent, utilities, advertising and professional fees. Subtract total expenses from total income to find the business's net profit or loss.

3. Personal Finance Section (Form 1040): Include David's estimated tax payments and Social Security payments. Report David's wife's income and income tax withheld.

4. IRA contributions Consider the IRA contributions made by both David and his wife.

Scenario 2

Scott Miller, a lawyer, has followed the transaction throughout 2022:

(Amount in $) Fees earned 141,250.00 Expenses for 2022: Payroll expenses 3,100.00 Repair and maintenance expenses 5,100.00 Insurance expenses 8,000.00 Rental expenses 8,650.00 Utility expenses 3,900.00 Advertising expenses 16,500.00 Professional fee expenses 51,500.00

During 2022, Scott, 34, paid $20,400 in estimated payments and $7,150 for social security. His 31-year-old wife earned $31,500 and $4,950 in income tax withheld. She paid $11,750 in mortgage interest. In 2022 they opened an IRA account for $5,500 each. They had medical expenses of $12,300.

1. Gather information: Review the financial data provided for Scott Miller, a 34-year-old attorney, and his 31-year-old wife for the year 2022. Take note of the various transactions, fees earned, and expenses incurred.

2. Form 1040-Personal Information: Begin by entering personal information for Scott and his wife, including their ages, in the appropriate sections of Form 1040. Income Section (Form 1040): Enter Scott's fees as income on Form 1040. Include his wife's earned income and income tax withheld. Report any other source of income.

3. Expense Section (Annex C): List and categorize business expenses, including payroll, repair and maintenance, insurance, rent, utilities, advertising, and professional fees. Subtract total expenses from total income to determine the net profit or loss of Scott's law practice.

4. Personal Finance Section (Form 1040): Include Scott's estimated tax payments and Social Security payments. Report his wife's income tax and income withheld. Include the mortgage interest paid by Scott.

5. Schedule A - Itemized Deductions: Record medical expenses incurred by Scott and his wife. Include mortgage interest paid.

6. IRA contributions: Consider the IRA contributions made by both Scott and his wife. Check again: Make sure all figures are accurate and calculations are in line with the latest IRS guidance. Complete the Forms: Complete Form 1040, Schedule C for business income and expenses, and Schedule A for itemized deductions.