Complete the 2019 Federal Tax Return

Family Information:

Husband	Adrian Johnson	SSN 598-94-2583	Birthday: 8/21/1960
Wife	Audria Johnson	SSN 301-52-2942	Birthday: 4/15/1966
Home address	461 Golden Ave, Long Beach, CA 90802
Son	Alan Johnson	SSN 614-42-5871	Birthday: 2/08/1998
Daughter	Mary Johnson	SSN 658-98-7480	Birthday: 6/13/2008

Facts:

1. Audria Johnson earned gross wages of $45,000 from Microsoft Corp. Her 2019 Form W-2 shows that $4,500 has been withheld from her paycheck for payment of federal income taxes.

2. Adrian Johnson also received Social Security benefits of $16,000 in 2019.

3. Adrian Johnson owns a used bookstore in Long Beach called Story Books. It is a sole proprietorship located at 2 Pine Ave, Long Beach, CA 90802. Its income and associated expenses for the year ending December 31, 2019, are the following:

Gross Income	$ 405,000
Less: Cost of Goods Sold	(212,000)
Gross Profit	193,000
Automobile Expense	(4,100)
Depreciation Expense	?
Office Expense	(50,000)
Supplies Expense	(3,600)
Meals Expense	(3,000)
Entertainment Expense	(2,000)
Utilities Expense	(3,900)
Salaries and Wages Expense	(90,000)
FICA tax Expense	(6,000)
Total Expense	(?)
Net Income/(Loss)	$ ?

On January 1, 2019, Story Books purchased a new delivery van for $60,000. The vans weight does not exceed 6,000 pounds. Furthermore, it purchased bookcases (7-year property) for $18,000, and sofas (5-year property) for $8,000 on March 1, 2019. It elected to use MACRS (half-year convention).

4. Interest income consists of the following:

Citibank	$ 800	US Bank	$ 120
Wells Forgo	205

5. Dividend income consists of the following:

CFD Etrade	$ 7,200	LUCKY	$ 4,000
(Qualified, $200)		(Qualified, $4,000)

6. Audria Johnson is previously divorced (in 2010) from Max Brown (SSN 453-87-5402), and she had one child with him. In 2019, she made alimony payments totaling $16,000 to him along with child support payments of $8,000. She does not claim this child as a dependent.

7. The Johnsons own a house at 242 6^th street, Seal Beach, CA, 90740. They purchased this house on January 1, 2013, for $500,000. 80% of the purchase price was related to the house, and the remaining 20% was related to the land. Starting from January 1, 2014, they have converted it to a rental property and rented it to James Bill. In 2019, its rental report showed the following:

Rental Income	$ 38,000
Repair expense	(1,500)
Property tax expense	(4,000)
Utilities Expense	(300)
Total Expense	(5,800)
Net Income/(Loss)	$ 32,200

8. The Johnsons also had invested in several flow-through entities (they have not actively participated in the activities). In 2019, the results from these flow-through entities were as follows:

Socal Brewers (Partnership)

$ 5,000

Rolling Sushi (S-corp)

($ 5,800)

9. In 2016, Adrian Johnson purchased an annuity from MyLife for $99,000. Monthly payments of $1,000 on the annuity started on July 1, 2019 and will continue for a total of 15 years.

10. On October 1, 2012, the Johnsons bought a house as their primary personal residence for $250,000. They paid cash. It is located at 1531 Olympic Ave, Placentia, CA 92870. They sold it on February 1, 2019 for $500,000 and incurred a commission fee of $50,000.

11. Adrian Johnson made the following stock sales:

Shares/Stock name	Purchase Date	Sale Date	Sales Price	Purchase Price
150 shares of Ford Co.	3/25/2019	7/05/2019	$4,000	1,000
300 shares of Amazon	5/12/2015	9/25/2019	$18,000	14,000
100 shares of Starbucks	8/30/2012	10/13/2019	$5,000	4,000
500 shares of HP Co.	6/11/2019	11/30/2019	$3,000	5,000

12. Medical expenses for the family in 2019 were as follows:

Doctors	$ 10,000	X-lays	$ 650
Dentists	1,200	Glasses/Contact lenses	700

13. Taxes paid in 2019 (in addition to any other taxes discussed previously) were as follows:

State income taxes	$ 5,200	Real property taxes	$ 6,700
Automobile license fees (based on its year)	1,900

14. In 2019, Audria Johnson made an IRA contribution of $5,500

15. Mortgage interest paid in 2019 (in addition to any other mortgage interests discussed previously) was $12,600 on their personal residence. Assume the outstanding principal on this mortgage is 300,000.

16. Cash charitable contributions made in 2019 were as follows:

UNICEF

$ 5,800

Red Cross

$ 2,200

17. The Johnsons incurred childcare expenses for their daughter, Mary, of $14,000 in 2019 in order for them to work. These expenses were paid to Sherry Williams (SSN: 482-93-0923), who lives at 4532, main Street, Long Beach, CA 90223.

18. Alan Johnson is a full-time college student as a fourth-year student. He was studying at Boston University in the United States, He earned no income while he was studying. The Johnsons paid his tuition of $10,000 for 2019.

19. The Johnsons made an estimated tax payment of 15,000 (in total) for the year. This amount reflects all four quarters estimated tax payment.

20. The Johnsons claim both Alan and Mary as their dependent.