Dave and Sarah Stevens 2020 Individual Income Tax Return Form 1040 Dave Stevens, age 34, is a self-employed physical therapist. His wife, Sarah, age 31, teaches English as a second language at a local language school. Dave's social security number is 111-11-111. Sarah's social security number is 222-22-2222. Sarah and Dave have three children: Andrew, age 8, Isaac, age 6; and Mira age 3. The children's social security numbers are, respectively, 333- 33-3333, 444-44-4444, and 555-55-5555. The children are qualifying dependents of Sarah and Dave. They live at 12637 Pheasant Run, West Bend, Oregon 74658. They will file a joint federal tax return for 2020. They are US citizens. They had no virtual currency or foreign transactions in 2020. The Stevens have the following items pertaining to their 2020 Federal income tax return: . Sarah's salary for 2020 is $32,000, with $9,600 in federal income tax and $1,600 in state income tax being withheld. Sarah's father passed away during the year. She received $150,000 from a life insurance policy. Neither Dave nor Sarah paid any of the premiums. . In 2020, Dave paid $5,000 in dental expenses for the family and $800 for eyeglasses for Issac. Their medical insurance would not pay the expenses. They have no medical mileage and no medical insurance reimbursements. They paid $3,600 in medical insurance premiums during 2020. . On October 17, 2020, Dave and Sarah went to the Choctaw Casino in Broken Bow, Oklahoma and won $15,000 at the blackjack table. The next night, they lost $2,000 at the slot machines. They have receipts for both their wins and losses. They received a state income tax refund in 2020 of $3,500 for state income taxes withheld in 2019. Last year (2019), they used the standard deduction when completing their 2019 Federal income tax return. o Other items of income: o Alcon Corporation bond interest income $7,600 o City of West bond interest income $7,000 Pear Corporation Dividend (qualified) $4,500 South Lake Mutual Fund Capital Gain Distribution $900 Ordinary Dividend (nonqualified) $950 o Interest income from a certificate of deposit at the Bank of West Bend of $3,200. o . They had the following capital asset transactions in 2020: o o Purchased 10 stock options for Krispy Kreme Company common stock on February 14, 2020 which expired on October 1, 2020. The options cost $850 and were allowed to expire. o On March 1, 2020, land was sold for $36,000. The land was received as a divorce property settlement on January 10, 2005 from Dave's ex-wife. At the time of the settlement, the land's FMV was $32,000. His ex-wife's basis for the land, purchased on January 10, 2002, was $28,500. o A personal-use computer acquired on March 2, 2019 for $4,000 was sold for $1,580 on July 10, 2020. o A membership card for a prestigious West Bend country club was sold for $10,500 on August 15, 2020. The card was acquired on October 10, 2015, for $6,000. On August 16, 2020, they sold for $3,700 their 10 shares of York Corporation purchased as an investment on February 16, 2020 for $2,600. (No code for Form 8949 is applicable). On March 15, 2020, Dave sold for $6,500 an antique watch fob. The fob was a gift from his grandfather on January 10, 2000, when its FMV was $1,000. The fob was purchased by his grandfather on April 2, 1981 for $1,500. o 10 shares of Texsun Industries, Inc. stock held as an investment were sold for $26,000 on December 5, 2020. The securities were inherited from Sarah's uncle, who died on April 10, 2016 when the fair market value of the securities were $19,000. The uncle purchased the securities on January 10, 2014, for $15,700. (No code for Form 8949 is applicable). o They have a short-term capital loss carryover of $550 into 2020. O In 2020, they incurred the following expenses: Qualified residence interest as reported on Form 1098 - $8,900 Property taxes on their home - $3,600 Cash charitable contributions - $14,000 CPA fees to prepare federal and state tax returns for 2019 o $80 for personal tax return o $100 to prepare Schedule C for Dave's business . In addition to his medical practice, Dave spends 15 hours every week managing his stock investments. To make sure he is aware of all current investment strategies and best practices, he subscribes to the following journals: Wall Street Journal - $150 U.S. News & World Report - $55 Money Magazine - $45 . . Dave's Medical Practice Dave is a self-employed physical therapist doing business as "Medical Physical Treatments." His office is located at 942 Woodview Drive, West Bend, Oregon 74624, and his employer ID number is 11-1111111. Dave has been practicing for four years, and he uses the cash method of accounting. He materially participates in the business. The business made no payments which would require the filing of a Form 1099. As it is a service business, the business has no cost of goods sold. During 2020, Dave recorded the following items of income: Revenue from patient visits - $300,000 Interest earned on the office checking account balance - $225 O . The following expenses were recorded for the office: . . . Property taxes $4,500 Mortgage interest 12,000 Depreciation 4,500 Malpractice insurance 37,500 Utilities 3,750 Office staff salaries 51,000 Rent payments on equipment 15,000 Office magazine subscriptions 150 Office supplies 24,000 Medical journals Dave pays $50 annually for use of a safety deposit box to store certain confidential documents related to his business. Dave also prepaid $33,000 in estimated federal income tax and $5,200 in estimate Oregon income tax for 2020. . . . 330 Complete Form 1040 and accompanying schedules for Dave and Sarah Steven's Federal income tax return for the 2020 tax year. Use all rates and deductions, that are applicable for 2020. Ignore any credits, penalties, the alternative minimum tax, and the net investment income tax. In filling out Form 8949, all transactions will have box (C) or (F) checked. There is no need to fill-out than one Form 8949. The return should contain all information needed so that Stevens should be able to immediately sign the return and send it to the IRS when you present it to them. Form 1040 Schedule 1 (Form 1040) Schedule 2 (Form 1040) Schedule A (Form 1040) Schedule B (Form 1040) Schedule C (Form 1040) Schedule D (Form 1040) Schedule SE (Form 1040) Form 8949 Form 8995 Tax Computation Worksheet Notes to Tax Return