INDIVIDUAL TAX RETURN PROBLEM

Cletus and Josepha Mayor have been married for twelve years and currently live

at 2907 Seven Oaks Lane, Columbia, SC 29210. Their Social Security numbers are

223-34-4444 and 322-32-2222, respectively. They have two daughters, Sheena, age

10, (SSN 344-44-1234) and Carletta, age 7, (SSN 566-55-6543) who live with them

and are fully supported by them.

Cletus is a manager for a local building contractor and earned a salary of

$59,800 for the current tax year. He had $5,600 withheld for federal income

taxes and $1,300 for state income taxes. Josepha is an elementary school teacher

and earned $31,950. She had $2,280 withheld for federal income taxes and $700

for state income taxes.

On July 20 they purchased a new home for $210,000. The last five years they

have lived in rented homes or apartments because they moved frequently for

Cletuss job before settling in Columbia. They paid total mortgage interest on their

new home of $7,250 for the period of time they owned the home, all of which

was reported to them on Form 1098. Points incurred on the purchase of the new

home were $1,800 (also reported on Form 1098).

Cletus contributed $2,000 to his Roth IRA and Josepha contributed $1,000 to

hers.

They paid $1,200 in premiums for medical and dental insurance, had $2,800

in unreimbursed doctor and dentist bills, and paid $300 for an unreimbursed hospital

bill.

They paid property taxes of $1,825 on the new home, which was properly

allocated between them and seller on their closing statement.

In June, they renewed the license plates on their two cars paying a total of

$265. This amount includes a flat fee of $40 per auto plus one percent based on

the value of the autos. They also paid a total of $1,100 in state general sales

taxes during the year.

Josepha spent $1,120 on materials for use in her classroom and spent $1,400

on tuition and fees for two courses leading to her master's degree in education

at a local college. Cletus took two continuing education courses to maintain his

general contractor's license. These courses cost $300 and were not reimbursed

by his employer.

Just prior to moving to the new home, the Mayor's had a party for the neighbors

to say "goodbye." During the party, Josepha took off her diamond ring

while she was working in the kitchen. When she went to get the ring later, it

was gone. It was established that the ring had been stolen and could not be

recovered. The ring cost $3,700 when purchased a number of years before.

Because Josepha had replacement value insurance on the ring, she received

$5,000 from the insurance company to acquire a substantially similar ring. She

decided not to purchase a replacement.

Josepha paid $2,300 in after-school child care expenses ($1,150 for each

daughter) to Dawn-to-Dusk Care, 18 Elk Grove Street, Columbia, SC 29210, EIN

59-12345678.

The couple earned $90 in interest on their savings and checking accounts with

the First National Bank of South Carolina and $220 in interest on the Teacher's

Union money market fund.

Required

Complete Form 1040 (married filing jointly) and any required related forms and

schedules for the Mayors using the 2013 Tax return forms.