Fill out a Form 1040 (including any schedules 1-6 needed), Schedule A, Schedule C, Form 540 and 540 Schedule CA using the following information. During 2019, Terry Taxpayer (SSN 222-11-3333) and Kelly Taxpayer (SSN 111-22-4444) were married and lived together all year in the state of California. Terry and Kelly have two children who lived with them all year, Chris (SSN 223-33-4444) and Alex (SSN 333-22-1111) ages 9 and 7 on December 31, 2019.

Terry earned $120,000 in wages. Terry had $6,900 withheld to go toward 2019 state income taxes and during 2019 had $2,415 withheld to pay toward state disability taxes.

Kelly created a small business that consisted of an internet site devoted to preparing tax returns. Kelly used a spare room in the house they owned to run the business and the room was used exclusively for business. The spare room was 600 square feet out of a total 4200 total square feet for the house. Terry and Kelly spent $1,300 for the year on household utilities and the depreciation on the whole house (if Kelly and Terry could have claimed depreciation on the whole house) was $2,800 for the year.

Kelly earned $2,065 in revenue from the internet business for the year, paid a $80 subscription fee to GoDaddy.com to get a domain name. Kelly had no other expenses except to try to improve the chances of getting business, Kelly gave five prospective customers a decorative time clock (with no advertising), one to each customer, and each clock cost $100 a piece.

After preparing their 2019 state income tax return, Kelly and Terry discovered they owed $4,500 in state income taxes to the state of California which they paid on April 15, 2020.

On March 25, 2019, they donated a car worth $5,350 to the local 501(c)(3) charity devoted to helping animals harmed in the making of motion pictures. That charity immediately sold the car for $4,650 (the car was properly acknowledged by the charity, but not appraised).

During 2019, the couple paid property taxes to the state of California of $8,200 on their personal residence and paid $18,000 in mortgage interest on the $340,000 loan they used to purchase their personal residence.

*** Make any reasonable assumptions for missing data (assume that they had $7,900 in federal income taxes withheld on the wages earned during the year), ignore any self-employment taxes, ignore any Earned Income Credit, and ignore any alternative minimum tax.***