Complete Schedule A Itemized Deductions for Nick and Rachel

Client Facts: Nick M. Viall and Rachel A. Lindsay, husband and wife, file a joint return. They live at 113 Bachelor Way, Austin, TX. 42871. Nick's Social Security number is 234-56-7809, and Rachel's is 987-56-4321. Nick was born on November 12, 1956, and Rachel was born on September 25, 1962. Nick and Rachel file a joint tax return. Nick retired from ABC Medical, and Rachel works part-time as an accountant. Nick and Rachel had the following gross income for 2018: Rachel earned a salary of $40,000 working part-time as a tax-accountant during busy season. Interest income of $22,000 from various corporate bond investments. Interest income of $10,000 from bonds issued by the city of Austin. Other information that affects their tax return for the year is as follows: Rachel had $6,000 Federal tax withheld from her paycheck during the year and $2,500 in state income taxes withheld. The couple had other expenses that were all paid in 2018, which they told you may qualify as itemized deductions: Property taxes on their home - $7,750 > Mortgage interest - $18,000 (acquisition indebtedness; balance of $450,000 at the end of the year) Charitable contribution (cash) -$3,000 (to Trump Foundation, a qualified organization) They will deduct state income taxes paid during the year, rather than sales taxes paid during the year. In 2018, Nick started provided medical consulting services as a sole proprietor and had the following income and expenses from his consulting business: Consulting fees received - $55,000 Liability insurance premiums paid - $1,000 Office supplies - $400 Meals with clients all reasonable in amount) - $1,500 He will use the cash method of accounting for tax purposes. Nick drove his personal automobile to/from meeting clients, for a total of 2,200 miles in 2018. He used the same vehicle for personal purposes, but did not drive his wife's car at all. Nick verified that he has kept thorough written records to support the deduction for his business transportation. (Note that you will have to look up the mileage rate for 2018.) Nick made an investment in an ultrasound machine, which he will use in his consulting business. He placed this in service on October 29, 2018, and paid $25,000. The equipment has a 5-year class life. He does not want to expense any of the cost under Section 179 or take bonus depreciation on the machine, but will use MACRS to calculate his depreciation deduction in 2018. Nick took a business trip to a client's office during the year. He had no personal days on this trip. The expenses of the trip were: Airfare - $425 > Lodging - $1,200 Parking at the airport - $65 Taxi from the airport to the hotel - $30 Meals while traveling - $410 Based on the advice of a friend, Nick made quarterly estimated tax payments (Federal tax) in anticipation of the tax he would owe on his consulting income in 2018, totaling $20,000. The couple had the following transactions involving their investment assets during 2018: > Sold 500 shares of Urban Enterprises on 2/14/2018 for $185,000. (Stock was inherited from Nick's father, who died on November 28, 2017. The FMV of the stock on that date was $172,000; Nick's father had purchased the stock for $100,000.) Sold 100 shares of Harbaugh Inc. stock on 5/1/2018 for $25,000. (Stock was purchased on 1/2/2017 for $32,500.) Sold 300 shares of Buckeye Corp. stock on 11/1/2018 for $100,000. (Stock was purchased on 11/1/2017 for $112,000). All of these transactions were reported to them on form 1099-B from their investment company, and the basis was reported to the IRS for all of these transactions. SCHEDULE A Itemized Deductions OMB No. 1545-0074 (Form 1040) Go to www.irs.gov/ScheduleA for instructions and the latest information. Department of the Treasury Attach to Form 1040. Attachment Internal Revenue Service (99) Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16. Sequence No. 07 Name(s) shown on Form 1040 Your social security number 2018 Medical and Dental Expenses |3| Taxes You Paid Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions)... 2 Enter amount from Form 1040, line 7 2 3 Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -- 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box. b State and local real estate taxes (see instructions) . . . c State and local personal property taxes . . . . . . . . d Add lines 5a through 5c . e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) . . . . . . . . . . . . . . . . 6 Other taxes. List type and amount 5a 5c 5e Interest You Paid Caution: Your mortgage interest deduction may be limited (see instructions). 7 Add lines 5e and 6 . . . . .. . ! ! 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box. ...... U a Home mortgage interest and points reported to you on Form 1098 . . . . . . . . . . . . . . . . . . . b Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8a .: ... 10 c Points not reported to you on Form 1098. See instructions for special rules. . . . . . . . . . . . d Reserved. . . . . . . . . . . . . . e Add lines 8a through 8C.. 9 Investment interest. Attach Form 4952 if required. See instructions. . . . . . . . . . . . . . . . L 10 Add lines 8e and 9 . Gifts to Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions . . . . . . . . . . . . . . . 12 Other than by cash or check. If any gift of $250 or more, see If you made a gift and got a instructions. You must attach Form 8283 if over $500... benefit for it, 13 Carryover from prior year . . . . . . . . . . . . L see instructions. 14 Add lines 11 through 13. .. mes 1 Hougn 15. . . . . . . . . . . . . . . . . . . . . Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions. . . . . . . . . . . . . Other 16 Other-from list in instructions. List type and amount ......... Itemized ---- - Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040, line 8 . . . . . . . . . . . . . . . . . . . . . . Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check here . . . For Paperwork Reduction Act Notice, see the Instructions for Form 1040. Cat. No. 17145C 14 15 ---------------- 16 Schedule A (Form 1040) 2018 Client Facts: Nick M. Viall and Rachel A. Lindsay, husband and wife, file a joint return. They live at 113 Bachelor Way, Austin, TX. 42871. Nick's Social Security number is 234-56-7809, and Rachel's is 987-56-4321. Nick was born on November 12, 1956, and Rachel was born on September 25, 1962. Nick and Rachel file a joint tax return. Nick retired from ABC Medical, and Rachel works part-time as an accountant. Nick and Rachel had the following gross income for 2018: Rachel earned a salary of $40,000 working part-time as a tax-accountant during busy season. Interest income of $22,000 from various corporate bond investments. Interest income of $10,000 from bonds issued by the city of Austin. Other information that affects their tax return for the year is as follows: Rachel had $6,000 Federal tax withheld from her paycheck during the year and $2,500 in state income taxes withheld. The couple had other expenses that were all paid in 2018, which they told you may qualify as itemized deductions: Property taxes on their home - $7,750 > Mortgage interest - $18,000 (acquisition indebtedness; balance of $450,000 at the end of the year) Charitable contribution (cash) -$3,000 (to Trump Foundation, a qualified organization) They will deduct state income taxes paid during the year, rather than sales taxes paid during the year. In 2018, Nick started provided medical consulting services as a sole proprietor and had the following income and expenses from his consulting business: Consulting fees received - $55,000 Liability insurance premiums paid - $1,000 Office supplies - $400 Meals with clients all reasonable in amount) - $1,500 He will use the cash method of accounting for tax purposes. Nick drove his personal automobile to/from meeting clients, for a total of 2,200 miles in 2018. He used the same vehicle for personal purposes, but did not drive his wife's car at all. Nick verified that he has kept thorough written records to support the deduction for his business transportation. (Note that you will have to look up the mileage rate for 2018.) Nick made an investment in an ultrasound machine, which he will use in his consulting business. He placed this in service on October 29, 2018, and paid $25,000. The equipment has a 5-year class life. He does not want to expense any of the cost under Section 179 or take bonus depreciation on the machine, but will use MACRS to calculate his depreciation deduction in 2018. Nick took a business trip to a client's office during the year. He had no personal days on this trip. The expenses of the trip were: Airfare - $425 > Lodging - $1,200 Parking at the airport - $65 Taxi from the airport to the hotel - $30 Meals while traveling - $410 Based on the advice of a friend, Nick made quarterly estimated tax payments (Federal tax) in anticipation of the tax he would owe on his consulting income in 2018, totaling $20,000. The couple had the following transactions involving their investment assets during 2018: > Sold 500 shares of Urban Enterprises on 2/14/2018 for $185,000. (Stock was inherited from Nick's father, who died on November 28, 2017. The FMV of the stock on that date was $172,000; Nick's father had purchased the stock for $100,000.) Sold 100 shares of Harbaugh Inc. stock on 5/1/2018 for $25,000. (Stock was purchased on 1/2/2017 for $32,500.) Sold 300 shares of Buckeye Corp. stock on 11/1/2018 for $100,000. (Stock was purchased on 11/1/2017 for $112,000). All of these transactions were reported to them on form 1099-B from their investment company, and the basis was reported to the IRS for all of these transactions. SCHEDULE A Itemized Deductions OMB No. 1545-0074 (Form 1040) Go to www.irs.gov/ScheduleA for instructions and the latest information. Department of the Treasury Attach to Form 1040. Attachment Internal Revenue Service (99) Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16. Sequence No. 07 Name(s) shown on Form 1040 Your social security number 2018 Medical and Dental Expenses |3| Taxes You Paid Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions)... 2 Enter amount from Form 1040, line 7 2 3 Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -- 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box. b State and local real estate taxes (see instructions) . . . c State and local personal property taxes . . . . . . . . d Add lines 5a through 5c . e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) . . . . . . . . . . . . . . . . 6 Other taxes. List type and amount 5a 5c 5e Interest You Paid Caution: Your mortgage interest deduction may be limited (see instructions). 7 Add lines 5e and 6 . . . . .. . ! ! 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box. ...... U a Home mortgage interest and points reported to you on Form 1098 . . . . . . . . . . . . . . . . . . . b Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8a .: ... 10 c Points not reported to you on Form 1098. See instructions for special rules. . . . . . . . . . . . d Reserved. . . . . . . . . . . . . . e Add lines 8a through 8C.. 9 Investment interest. Attach Form 4952 if required. See instructions. . . . . . . . . . . . . . . . L 10 Add lines 8e and 9 . Gifts to Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions . . . . . . . . . . . . . . . 12 Other than by cash or check. If any gift of $250 or more, see If you made a gift and got a instructions. You must attach Form 8283 if over $500... benefit for it, 13 Carryover from prior year . . . . . . . . . . . . L see instructions. 14 Add lines 11 through 13. .. mes 1 Hougn 15. . . . . . . . . . . . . . . . . . . . . Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions. . . . . . . . . . . . . Other 16 Other-from list in instructions. List type and amount ......... Itemized ---- - Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040, line 8 . . . . . . . . . . . . . . . . . . . . . . Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check here . . . For Paperwork Reduction Act Notice, see the Instructions for Form 1040. Cat. No. 17145C 14 15 ---------------- 16 Schedule A (Form 1040) 2018