Andy and Currie met in Tax class and were married. They have five children: Miranda age 6, Savannah age 10, Wenbo age 12, Rachel age 15, and Luke age 20. Luke has his own apartment but he works in the family business, he earned $25,000 last year. Andy works for a CPA firm. In 2020 he earned $77,000, $12,000 of federal income tax was withheld, and $3,000 of state income tax was withheld. In addition, they earned $300 of interest on their joint savings account, they received dividends of $1,200 on stock that they own (all the dividends are qualified), and they sold 100 shares of stock for $20 a share (they paid $10 a share three years ago).

Currie operates a welding shop in a facility that she rents. The business motto is Still not as fun as Tax Class. She operates as a sole proprietor, she has one part-time employee, plus Luke who does most of the welding (the rest of the children have to clean up the shop each evening before they get their supper).

Income and expenses of the welding business in 2020 were:

Gross revenues $248,000

Employee salaries 54,000

Employee payroll taxes 5,400

Building Insurance 16,000

Welding supplies 55,000

Rent 18,900

Currie paid estimated State income tax of $4,300 during the year, and estimated federal income tax of $15,000.

In addition the family also had the following expenses:

Family medical and dental expenses $19,000

Real estate taxes 3,400

Home mortgage interest 9,000 (their mortgage is $300,000)

Credit card finance charges 2,600

Sales tax 4,200

Cash donations to their church 4,000

Assume that there is no Alternative Minimum Tax (AMT) for them.

QUESTION 11

1. Do they have any medical expense itemized deductions

   		yes, $19,000
   		no
   		Yes, $6,158
   		Yes, $1,007

1 points

QUESTION 12

1. Based on the facts of the case, on their Schedule A, what taxes should they list?

   		Sales tax and real estate taxes
   		Sales tax, real estate tax. and state income tax
   		State income tax and real estate tax
   		State income tax and sales tax

2 points

QUESTION 13

1. What is the amount of taxes listed on Schedule A?

   		3400 + 4200 = 7600
   		3000 + 4300 + 3400 = 10,700 (limited to 10,000)
   		12000 + 3000 + 3400 = 18400
   		4300 + 15000 = 19300

1.5 points

QUESTION 14

1. Personal casualty losses are only allowed if the loss takes place in a Federally declared disaster.

   True

   False

2 points

QUESTION 15

1. Do they have any interest deductions on their Schedule A?

   		Yes, credit card finance charges
   		No
   		Yes, home mortgage interest
   		Yes, home mortgage interest and credit card interest

2 points

QUESTION 16

1. What is the amount of their interest deduction on Schedule A?

   		11,600
   		9,000
   		10,250
   		2,600

2 points

QUESTION 17

1. Do they have Gifts to Charity? If so, what is the limit on these gifts?

   		Yes, 60% AGI
   		No
   		Yes, 30% AGI
   		Yes, 50% AGI

3 points

QUESTION 18

1. What is their total Gifts to Charity on Schedule A?

   		7000
   		4000
   		2000
   		0

3 points

QUESTION 19

1. What are their total itemized deductions?

   		29,858
   		29,158
   		24,007
   		34,700

1 points

QUESTION 20

1. Which is better for them, itemized deductions or standard deduction?

   		Standard
   		Itemized
   		I don't know yet

2 points