I7-62 Dan and Cheryl are married, file a joint return, and have no children. Dan, age 45, is an independent contractor working in pharmaceutical sales and Cheryl, age 42, is a nurse at a local hospital. Dans SSN is 400-20-1000 and Cheryls SSN is 200-40-8000 and they reside at 2033 Palmetto Dr, Atlanta, GA 30304. Dan is paid according to commissions from sales, and he has no income tax or payroll tax withholdings. Dan operates his business from his home office. During 2018, Dan earned total commissions in his business of $125,000. Cheryl earned a salary during 2018 of $45,400, with the following withholdings: $6,000 federal taxes, $1,800 state taxes, $2,815 OASDI, and $658 medicare taxes.

During 2018, Dan and Cheryl had interest income from corporate bonds and bank accounts of $1,450 and qualified dividends from stocks of $5,950. Dan also actively trades stocks and had the following results for 2018:

LTCG $4,900

LTCL ($3,200)

STCG $0

STCL ($7,800)

He had no capital loss carryovers from previous years.

Dan does a considerable amount of travel in connection with his business and uses his own car. During 2018, Dan drove his car a total of 38,000 miles, of which 32,000 were business related. He also had business related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the following travel expenses while away from home during the year:

Hotel $4,200

Meals $820

Entertainment of customers $1,080

Tips $100

Laundry and cleaning $120

Total $6,350

Dan uses the simplified method to deduct expenses for his office at home. His office measures 15 feet by 12 feet in size.

Cheryl incurred several expenses in connection with her nursing job. She paid $450 in professional dues, $200 in professional journals, and $350 for uniforms.

Dan and Cheryl had the following expenditures during the year:

Health insurance premiums (after tax) $4,400

Doctor bills $470

Real estate taxes on home $6,800

Personal property taxes $1,400

Mortgage interest-all deductible $7,400

Charitable contributions- cash $9,000

Charitable contributions- GE stock owned for 5 years: FMV $8,000

Adjusted basis $2,000

Tax preparation fees $750

During 2018, Dan and Cheryl paid federal and state estimated tax payments on a quarterly basis. Federal payments for the year amounted to $24,000. State estimated payments for the year amounted to $2,200. Compute Dan and Cheryls income tax liability for 2018. Disregard the alternative minimum tax.

I7-64 Using the information in problem I7:62 for Dan and Cheryl, prepare a Form 1040, including Schedule 1 and 4, Schedule A, C, D and SE, and Form 8829 for 2018.