Janice and Richard Morgan are married and have no dependents $($MFJ$).$ Janice works as an employee from Worldwide Publishing and also as a freelance writer. She called her freelance writing business Writers Anonymous $($self employed$).$ Richard is an employee, earning a W$-2$ wage. They live at $132$ Stone Avenue, Pleasant Hill, NM $88135.$ Self Employed Information $($Schedule C$)$: Income from sale of articles $65,000$ Rent $13,500$ Utilities $7,900$ Supplies $1,800$ Insurance $($business liability$)5,000$ Travel $($assume fully deductible$)2,300$ Meals $($while on business travel$)600$ Meals $($while meeting with clients$)600$ Country Club $($Used to entertain clients$)4,000$ Client entertainment expenses $1,000$ Personal items: Wages $($Janice$)$ $$112,100$ Wages $($Richard$)45,000$ Interest from checking account from First Bank $1,500$ Home mortgage interest paid to First Bank $6,500($Secured by principal residence, acquisition debt$)$ Home Equity Line of Credit $3,000($Secured by principal residence, used to pay off credit cards$)$ Property taxes on personal residence $4,000$ Charitable contributions $5,700$ Federal income tax withholding $35,000$ State income tax withheld $12,500$ During the year, Janice invested $$3,000($tax basis and at$-$risk basis$)$ into ABC limited partnership $($a passive investment$).$ Her share of the limited partnership income for the year was $$4,000,$ and Janice received a $$5,000$ distribution from ABC limited partnership. Hint #$2$ During the year, Janice invested $$10,000($tax basis and at$-$risk basis$)$ into DEF limited partnership $($a passive investment$).$ Her share of the limited partnership loss for the year was $$11,000,$ and Janice received a $$2,000$ distribution from DEF limited partnership. Additionally, Janice had: $(1)$Both Janice and Richard made a $$6,000$ contribution each to their traditional IRA accounts. Janice$$s employer, Worldwide publishing, offers a $401$k that Janice contributes to$.$ Richard$$s employer does not offer a $401$k$.(2)$Sale of LMN publically traded stock on $8/15/2020$ for $$15,000($originally purchased for $$5,000$ on $1/15/2016)(3)$Sale of QRS publically traded stock on $10/15/2020$ for $$2,000($originally purchased for $$6,000$ on $12/15/2019)(4)$Sale of TUV publically traded stock on $4/15/2020$ for $$7,000($originally purchased for $$2,000$ on $7/15/2019)$ Prepare the $2020$ Federal income tax return for Janice and Richard. $(2)1040,(3)$ Schedule $1,(4)$ Schedule $2,(5)$ Schedule A $($even if not needed$),(6)$ Schedule C page $1,(7)$ explanation $($including calculation$)$ for each line item on each form and schedule. This explanation must include ending basis for limited partnerships. Normally, this tax return would require additional forms including schedule B$,$ D$,$ E$,$ SE and form $4797,$ and $6198,$ etc. However, I do not require them. Instead, the required calculations$/$explanations will be sufficient. Hints: $1)$The Net Income from the Schedule C $($Writers Anonymous$)$ will go on Schedule $1,$ line $32)$Schedule $1$ line $5$ will include the net income$/$loss from the limited partnerships. These are NOT subject to Self$-$Employment tax as they are passive investments. Make sure to include calculations $/$ explanations for any disallowed losses and ending basis for both entities. $3)$There should be something in line $14$ of schedule $1.4)$Schedule $2,$ line $4$ is for the self$-$employment tax. SE tax is separate from and in addition to the tax calculated on form $1040$ line $16.5)$The taxpayer has a refund. Form $1040$ line $34.6)$The FICA cap for $2020$ is $137,700.$ FICA cap is applicable to an individual, not a married couple. i$.$e$.$ Richards income does not affect Janice$$s SE tax. $7)$Assume that both taxpayers have adequate health insurance. $8)$Do not forget the Qualified Business Income Deduction $($new in $2018),$ line $13$ form $1040.$ Assume Janice qualifies for this deduction. In Chapter $15,$ we can discuss the rules in more detail. Assume that the QBID is a deduction equal to $20\%$ of Qualified Business Income $($QBI$).$ With QBI being equal to net total of Schedule $1$ line $3,5,$ and $14.$ That is line $3+$ line $5$ line $14.9)$Net capital gains$/$losses goes on form $1040$ line $7.10)$The deductions for traditional IRA is on Schedule $1$ line $19.$ There were two $$6,000$ IRA contributions. The max for this line item is $$12,000.11)$Don$$t forget to check the box for filing status $($single$,$ MFJ$,$ HOH, or MFS$).$