Instructions: Prepare tax returns for John and Janet Lee. Given different options available within the current tax rule and regulation, you need to provide evidences regarding tax results of each option and make professional recommendations on which option may be more preferable for the clients.

Requirements: submit all needed forms, schedules, worksheets, supporting documents, and the final recommendations on or before April 2 class time.

Below are suggested files and supporting documents.

File 1: Schedule C, Schedule SE, Schedule 1, Schedule 2, Schedule 3, Form 4562, Form 2441, Form 8863, Form 1040, and all necessary explanation.

File 2: Schedule C, Schedule SE, Schedule 1, Schedule 2, Schedule 3, Form 4562, Form 2441, Form 8917, Form 1040, and all necessary explanation.

Clients information: John (SS # 111-11-1111) and Janet (SS# 222-22-2222) Lee are married and usually file joint returns. They live in 455 Home Street, 456 City Island State 90001. John works at a local community college. On his W2, he has wage income of 60,000 and federal and state income tax withholdings of $4,000 and $1,600 respectively. The whole family had qualifying health care coverage at all times during the tax year. Janet runs a tax service business as a sole proprietorship. For this tax year, she paid estimated tax payments of $4,000, and the following were related to her business operation:

Gross revenue from clients $75,000

Business mileage (incurred evenly over the year with proper mileage log) 8,000 miles

(A Honda Civic originally cost $35,000 was placed in service 5/1/17 exclusively for Janets business. Standard rate was used for the first year. They have a different car for personal use)

Parking fees (600)

Postage /UPS (400)

Annual software license fee (1,200)

Office Supplies (2,500)

Phone bill (1,600)

Internet service (1,800)

Rent (100 Sunny Street, 456 City and Island State 90001) (24,000)

Business insurance (3,500)

Professional education (register fees) (2500)

Travel to education course

Airplane (860)

Taxi (100)

Lodging ($300/night X 2 nights) (600)

Meals (with receipts) (200)

Business Assets Date purchased Cost

Computer 1 5/18/19 4,300

Computer 2 6/1/17 3,700

Printer/Copier 10/1/18 2,500

Office Desk 3/2/16 2,000

Furniture 5/1/15 4,000

John and Janet paid $6,000 to Wonderland Child Care Center for after school care for their daughter Linda (10 years old; SS # 333-33-3333). The centers address is 123 Sunny Street, 456 City and Island State 90001. The EIN for the center is 10-2XXXXXX.

Their older daughter Cathay (18 years old; SS # 444-44-444) is a freshman at a local university. In this tax year, she has W-2 income of $4,200, 1098T tuition and fees of $8,000, and book of $ 1,000.

Prepare tax return for the Lee with required schedule and forms. Specific depreciation rules for this tax year (if available) and 179 expense are elected on all eligible assets (179 was not taken on assets purchased in the prior years).