Interview Mormation Rob and Laura are calendar year, cash basis taxpayers who are married filing jointly. Rob is the custodial parent of his son, Ritchie, from a previous marriage. The Petrie family resides at 3196 Laurel Farms Road, Murfreesboro, TN 37130. Social security numbers and dates of birth for members of this family are as follows: Social Security Number Date of Birth Rob 123-45-6789 05/01/1980 An in-depth Laura 234-56-7891 09/06/1982 Rob and Ritchie 345-67-8912 10/18/2011 coupled with their documentation, reveals the following information for the current year: interview with Laura, a review of . Laura worked throughout the year for Webber and Associates as a CPA. Laura's W-2 indicates gross wages of $63,800 and income tax withholding of $14,592. (You may omit the requirement to attach a copy of the W-2 to the tax return.) Rob's extensive travel caused him to reconsider his career. He left the employment of Pegasus International as of 1/4/2020 and started his own business doing all types of architectural design work locally. He operates this business as a sole proprietorship (under the business name Quality Designs) from the basement of his home. Rob collected revenues of $156,000 and paid the following expenses related to this business: Liability insurance expense Repairs and maintenance Taxes and licenses expense Supplies expense $ 3,162 1.641 2,613 5,166 All these expenses pass the 12-month rule test for tax recognition in 2020, and Rob is eligible for the Qualified Business Income (QBI) deduction. Additionally, Rob fully documented business-related mileage of 1,643 miles that he put on his personal vehicle driving to various job sites. This is a service business, so Rob had no cost of goods sold. He also elected to forego any deduction for the business use of his home (i.e. the home office deduction), and he opted to use the standard mileage rate to account for his business transportation expenses rather than his actual costs. (You may omit the requirement to complete Part IV of Schedule C.) . Rob knew his decision to pursue self-employment had tax consequences, so he came to you earlier in the year to ask for your help. You advised him to make estimated tax payments on Form 1040-ES totaling $26,750 to prepay an estimate of his self- employment and income tax liability. Rob followed your advice and made timely estimated tax payments by completing and filing Form 1040-ES throughout 2020. . The Petries sold 300 shares of Quantum Corp stock for $65.00 per share on August 27, 2020. They originally paid $40.00 per share when they purchased the stock on January 19, 2005. This information was reported to the Petries on Form 1099-B. Additionally, all information including basis was reported to the IRS. Therefore, Form 8949 is not required. Laura received an inheritance in April of 2020, when her dear Aunt Louise passed away. Louise left Laura $8,000 cash through her will. Rob likes to play the state lottery. In 2020, he won $6,700 from the Mega Millions jackpot, which the state reported to him on Form W-2G. Rob is a stickler for record- keeping and also tracked all the times he played the lottery in 2020 and did not win. Rob had $950 in 2020 gambling losses prior to winning at Mega Millions, and no additional losses thereafter. . The Petries also received a Form 1098 from Regions Bank indicating they paid a total of $15,320 in home mortgage interest. The loan qualified as acquisition debt with an average outstanding principal balance of $261,000. They also paid $5,664 in real property taxes on this home and $463 interest on personal debt (i.e. a car loan and credit cards). The Petries gave $6,900 to their local church, an organization officially recognized by the IRS as a nonprofit, tax exempt entity. Rob and Laura had no liability for Tennessee income tax, but they paid sales tax on all applicable, personal purchases. (Search for the sales tax deduction calculator on the IRS website, and use it to simplify the calculation of their deductible sales tax. Assume the Petries had no additional large purchases that were subject to sales tax in 2020.) . The Petrie family had $13,600 in out-of-pocket medical expenses. Rob completed his legal obligation to pay his ex-wife $1,800 a month in alimony in June; therefore, he paid $10,800 in the current year. His ex-wife's social security number is 567-43-1265. Rob and his ex-wife divorced in June 2016. Rob and Laura paid $3,600 for Ritchie's care after school and when school was not in session. The provider of this care is as follows: Happy Child Daycare (Fed ID # 12- 3333333) 565 Greenleaf Lane, Murfreesboro, TN 37130. Additional Notes: Rob and Laura have adequate documentation to support each of the aforementioned expenses, and they have no carryforwards from previous years that will impact their return for the current year. Round all amounts presented on the tax return to the nearest dollar and leave the "cents column blank. Any lines on the tax return that you don't need to use should be left blank - do not enter zeros. These taxpayers have no AMT liability, so you may omit Form 6251. Everyone in the household had health insurance for the entire year. The coverage came through Laura's employer. Rob and Laura did not own any foreign bank accounts or investments. If any underpayment of taxes exists, assume that Rob and Laura paid in the appropriate percentage based on prior year taxes and are therefore not subject to any underpayment penalties. . . Interview Mormation Rob and Laura are calendar year, cash basis taxpayers who are married filing jointly. Rob is the custodial parent of his son, Ritchie, from a previous marriage. The Petrie family resides at 3196 Laurel Farms Road, Murfreesboro, TN 37130. Social security numbers and dates of birth for members of this family are as follows: Social Security Number Date of Birth Rob 123-45-6789 05/01/1980 An in-depth Laura 234-56-7891 09/06/1982 Rob and Ritchie 345-67-8912 10/18/2011 coupled with their documentation, reveals the following information for the current year: interview with Laura, a review of . Laura worked throughout the year for Webber and Associates as a CPA. Laura's W-2 indicates gross wages of $63,800 and income tax withholding of $14,592. (You may omit the requirement to attach a copy of the W-2 to the tax return.) Rob's extensive travel caused him to reconsider his career. He left the employment of Pegasus International as of 1/4/2020 and started his own business doing all types of architectural design work locally. He operates this business as a sole proprietorship (under the business name Quality Designs) from the basement of his home. Rob collected revenues of $156,000 and paid the following expenses related to this business: Liability insurance expense Repairs and maintenance Taxes and licenses expense Supplies expense $ 3,162 1.641 2,613 5,166 All these expenses pass the 12-month rule test for tax recognition in 2020, and Rob is eligible for the Qualified Business Income (QBI) deduction. Additionally, Rob fully documented business-related mileage of 1,643 miles that he put on his personal vehicle driving to various job sites. This is a service business, so Rob had no cost of goods sold. He also elected to forego any deduction for the business use of his home (i.e. the home office deduction), and he opted to use the standard mileage rate to account for his business transportation expenses rather than his actual costs. (You may omit the requirement to complete Part IV of Schedule C.) . Rob knew his decision to pursue self-employment had tax consequences, so he came to you earlier in the year to ask for your help. You advised him to make estimated tax payments on Form 1040-ES totaling $26,750 to prepay an estimate of his self- employment and income tax liability. Rob followed your advice and made timely estimated tax payments by completing and filing Form 1040-ES throughout 2020. . The Petries sold 300 shares of Quantum Corp stock for $65.00 per share on August 27, 2020. They originally paid $40.00 per share when they purchased the stock on January 19, 2005. This information was reported to the Petries on Form 1099-B. Additionally, all information including basis was reported to the IRS. Therefore, Form 8949 is not required. Laura received an inheritance in April of 2020, when her dear Aunt Louise passed away. Louise left Laura $8,000 cash through her will. Rob likes to play the state lottery. In 2020, he won $6,700 from the Mega Millions jackpot, which the state reported to him on Form W-2G. Rob is a stickler for record- keeping and also tracked all the times he played the lottery in 2020 and did not win. Rob had $950 in 2020 gambling losses prior to winning at Mega Millions, and no additional losses thereafter. . The Petries also received a Form 1098 from Regions Bank indicating they paid a total of $15,320 in home mortgage interest. The loan qualified as acquisition debt with an average outstanding principal balance of $261,000. They also paid $5,664 in real property taxes on this home and $463 interest on personal debt (i.e. a car loan and credit cards). The Petries gave $6,900 to their local church, an organization officially recognized by the IRS as a nonprofit, tax exempt entity. Rob and Laura had no liability for Tennessee income tax, but they paid sales tax on all applicable, personal purchases. (Search for the sales tax deduction calculator on the IRS website, and use it to simplify the calculation of their deductible sales tax. Assume the Petries had no additional large purchases that were subject to sales tax in 2020.) . The Petrie family had $13,600 in out-of-pocket medical expenses. Rob completed his legal obligation to pay his ex-wife $1,800 a month in alimony in June; therefore, he paid $10,800 in the current year. His ex-wife's social security number is 567-43-1265. Rob and his ex-wife divorced in June 2016. Rob and Laura paid $3,600 for Ritchie's care after school and when school was not in session. The provider of this care is as follows: Happy Child Daycare (Fed ID # 12- 3333333) 565 Greenleaf Lane, Murfreesboro, TN 37130. Additional Notes: Rob and Laura have adequate documentation to support each of the aforementioned expenses, and they have no carryforwards from previous years that will impact their return for the current year. Round all amounts presented on the tax return to the nearest dollar and leave the "cents column blank. Any lines on the tax return that you don't need to use should be left blank - do not enter zeros. These taxpayers have no AMT liability, so you may omit Form 6251. Everyone in the household had health insurance for the entire year. The coverage came through Laura's employer. Rob and Laura did not own any foreign bank accounts or investments. If any underpayment of taxes exists, assume that Rob and Laura paid in the appropriate percentage based on prior year taxes and are therefore not subject to any underpayment penalties