John R. Lane (SSN 123-44-6666) lives at 1010 Ipsen Street, Yorba Linda, California 90102. John, a single taxpayer, age 66, has no dependents. John is a self-employed accountant who sees and consults his clients exclusively at his home office. Other relevant information for 2020 includes:

Earnings from his consulting business: $94,000

Personal Expenses (from Schedule A (see below*)) *

Other expenses (from Schedule C (see below **)) **

Gain or Loss on sale of a house (see below ***) ***

Tax Withholdings (prepayments) $6,000

* Personal expenses:

- Doctor visits for physical and dental exams $ 4,500

- Prescription drugs $ 2,770

- Vitamins $ 830

- Medical insurance premium payments $10,500

- Cosmetic surgery to improve appearance $ 6,650

- State and local income taxes $ 8,000

- State property taxes $ 3,500

- Legal fees to prepare a will $ 2,500

- Accounting fees for Form A analysis $ 1,300

- Interest on mortgage used to purchase qualified residence; the mortgage amount is $350,000) $12,250

** Other expenses:

- Legal fees for business conflict resolution $10,000

- Political contributions to local organization $ 3,000

2

- Home office expenses (John is using one of his rooms

for home office where he exclusively is meeting with clients

and conducts relating administrative and managerial tasks) $12,000

- Travel expenses (John spent 5 days at the travel destination

taking care of his consulting business and 3 days for pleasure)

Airfare $1,600

Hotel - $150 per night

Meals - $50 per day

- Lunches and dinners with customers to discuss business $4,600

- Continuing education to retain Johns license $ 800

*** Gain or loss (short term or long term) on the house sale:

- John purchased a house in June 2007 for $300,000

- He added basement for $30,000

- He repainted roof for $2,500

- He repaired 3 broken doors (but not the home office door) for $3,500

- John sold the house in February 2020 whereas the buyer paid $220,000 in cash and assumed remaining mortgage on the house of $75,000.

- Depreciation allowed and taken as a business expense: $70,000