Dr. Robert Crawley is an OB/GYN. His move to medicine occurred as a second career. His first career was as a mechanical engineer. Roberts wife Cora Crawley is a successful architect. They have been married for 18 years and have three children under the age of 14. Their financial information for tax year 2019 is as follows:

• Roberts Salary from a local hospital $675,000 .

Federal Income Tax Withholding on Salary $180,000

• Interest Income from Nestle bonds $20,000
• Interest Income from Wells Fargo Bank $12,000
• Interest Income from State of California Bonds $12,500
• Gambling Winnings (in Las Vegas) $22,000
• Life Insurance Proceeds Death of grandmother $1,000,000
• Inheritance from Grandmother $1,700,000
• Annuity Payments (investment=$100K, payout=400K) $40,000
• Short term capital gains from stocks held less than 1 year $27,000
• Dividends from Sysco (qualified) $18,500
• Dividend from Scientific Atlanta (qualified) $25,000
• Dividends from T-mobile Europe (non-qualified) $20,000
• Mortgage Interest Principal ($1.750,000) $85,000 (new home acquired in 2018)
• Charitable Contributions to St. Marys Church $63,000
• Contributions to the Democratic National Committee $10,200
• Donation of property painting to local university $74,000
• Investment interest expense $85,500
• Real Estate Taxes residence $19,250
• Gambling Costs (lottery tickets, poker costs) $45,000
• Quarterly Estimated Tax Payments by the Crawleys $350,000 ($87,500 per quarter)

Other Capital Gain Information

• On December 11, 2018, the Crawleys sold 1,000 share of Microsoft for $83 per share. The commission on the trade was 2% of the sales proceeds. They originally purchased the shares on 2/5/1998 for a total purchase price of $55,000.
• On January 15, 2018 the Crawleys sold a mutual fund for $112,500 that they bought on 1/2/2016. They originally invested $72,200.
  • For tax year 2016, the couple received a substitute 1099 from the fund showing the following from the fund: Interest Income: $5,500 / Dividend Income: 2,750 / Short term capital losses of ($2,750), and Long-term capital gains of $6,000.
  • For tax year 2017, the couple received a substitute 1099 from the fund showing the following from the fund Interest Income: $4,500 / Dividend Income: 6,750 / Short term capital gains of $2,000, and Long-term capital gains of $9,400.

Business income for Cora Crawley, a sole-proprietor that reports her income on Schedule C:

Revenue $825,000

Salaries paid to staff $128,000

KEOGH Contribution (retirement plan) $50,000 report on 1040 ln 28

Office expenses $22,500

Travel $33,000

Legal and professional fees $53,650

Rent expense $32,400

Business meals $16,000

Country club memberships $15,000

Payroll tax expense $40,250

Section 179 & Depreciation Expense $178,000

Amortization of Goodwill and Purchased Customer Lists $42,000

Penalties and fines payable to State of Texas $19,500

Withdrawals by the business owner of cash $450,000

In addition to collecting a salary as an OB/GYN surgeon for a local hospital, Robert is also a partner in Downton Engineering Associates LLP. His K-1 information for tax year 2018 is as follows:

Ordinary Income: K-1 Line 1: $525,000 report on Sch. E. page 2

Guaranteed payment K-1 Line 4: $25,000 report on Sch E. page 2

KEOGH Contributions K-1 Line 13: $40,000 report on Schedule A ln 15a

Self Employment Income K-1 Line 14: $550,000 report on Schedule SE

Cash Distributions K-1 Line 19: $375,000

Requirements:

Prepare the following questions using Microsoft Excel. Prepare them in the order shown.

1. What is Coras 2018 net profit from her sole proprietorship?
2. Calculate the Crawleys Self Employment Tax (FICA Cap is $128,400)
3. What is the Crawleys 2018 Gross Income (i.e., line 22 of Form 1040)
4. What is the Crawleys 2018 Adjusted Gross Income?
5. What is the Crawleys 2018 Itemized Deductions
6. What is the Crawleys 2018 Taxable Income (after Section 199A deduction), Total Tax Liability (including NIIT and SE Tax) along with any tax refund or payment due.