Joan and Eric are married taxpayers who elect to file jointly.Joan and Eric live in Milwaukee, Wisconsin.Eric is an attorney who works asGeneral Counsel for at ABC, Inc.Joan has a small tax return preparation business.The couple uses the cash basis of accounting and is on the calendar year.Joan and Eric have two children, Ellen 12 and Graham 15. This year, Joan and Eric did not incur any childcare-related costs.

Joan and Eric also provide support to Joan's elderly mother, Geraldine.Geraldine lives in a low-income senior citizens apartment in Woodland, California.Geraldine receives $5,000 in social security benefits and $1000 in dividend income.Joan and Eric paid her rent of $800/month ($9600 for the year).

Eric received a salary of $200,000.His employer withheld Federal income taxes of $50,000 and the appropriate amount of FICA taxes.

Joan had the following income and expenses for her tax preparatino business:

Revenues$90,000

Cost of a new computer(used exclusively for her business 4,000

Office space rental (including utitllies)12,000

Technology charge for tax preparation3,000

Joan uses her personal vehicle to meet with clients.This year she had 2,000 business miles. Joan carefully tracks her business mileage, but does not keep track of other costs associated with her usage of the car except for parking fees of $100.She also received a $50 parking fine for a meter violation.This year, Joan contributed $500 to her traditional IRA.

In 2018, Joan and Eric had the following gains and losses for the current taxable year (Note: they had not have any other sales of business assets in the past 10 years:

QRX, Inc. stock held for 18 months$(3,000)

Land held for investment for 12 years4,000

Sale of business equipment held for 12 years:

Section 1245 recapture1,800

Sec. 1231 gain7,250

Eric and Joan's other items of income and expense for 2018 are as follows:

Dividends$400

Interest on corporate bonds700

Interest on municipal bonds566

Interest paid on home mortgage10,000

Real estate taxes on home3,000

Safety deposit box rental50

State income taxes8,000

Cash contributions to qualified charities8,000

Joan donated 20 hours of accounting service to their church.Her hourly billing rate is $100.

Questions:

What is Joan and Eric's filing status?How much child tax credit may they claim

Determine the Schedule C income that Joan should report for her business.

Determine Joan's self-employment tax.

Determine any capital gain or capital loss that Joan and Eric will claim this year.

Determine Joan and Eric's gross income

Determine John and Patsy's adjusted gross income

Determine the itemized deductions for 2018?Should they claim itemized deduction or take the standard deduction?

Determine their taxable income.

Determine their Federal incometax

Determine the amount of their tax refund or their tax due.