Mark R. and Suzanne N. Hauser (ages 45 and 46) are married and live at 14130 Laramie Lane, Gillette, WY 82717. Mark is a consulting engineer and Suzanne is a paralegal. They file a joint return and use the cash basis for tax purposes. 1. Trained as a mining engineer, Mark has developed considerable expertise in the treatment and disposition of waste material. He is also well versed in the Federal and state requirements for land reclamation projects. Mark operates a consulting business through which he advises clients on these matters. Mark's business activity code is 541990 . Most of his clients are small and medium mine owner/operators located in Wyoming and contiguous states (e.g., Montana, Idaho, Utah). In performing his services, Mark usually visits a client's job site. He submits his recommendations in a written report to the client, which is accompanied by a billing statement for his services and reimbursement for all out-of-pocket expenses for travel to the job site. Mark received the following amounts from his consulting business in 2021: 2. Mark also provided services for three companies from his office, so there are no travel expenses. These fees are not included in the receipts listed in item 1 above. Pierce Mining: Work done in December 2021; payment received January 2022 Forrie Mining: Work done in December 2020; payment received January 2021 Garrett Mining: Work done in March 2021; no payment received to date In late 2021, Mark learned that Garrett Mining is going through bankruptcy. As a result, Mark does not expect to collect any of this fee. 3. Other expenses paid by Mark in 2021 relating to his practice are listed below. Contribution to H.R. 10 (Keogh) retirement plan Premiums on health insurance (covering self, spouse, and dependents) Supplies - landscape models purchased from topographer for projects Advertising in trade journals Office expense Business phone and Internet service State occupation license Subscriptions to trade journals Membership dues to trade associations $9,000 3,800 3,200 2,400 1,200 860 300 240 180 4. Mark operates his consulting business out of an office in his home that measures 24 feet by 25 feet. The total living space in the home is 3,000 square feet. Mark inherited the home on Laramie Lane from his father who died on June 6, 2014. At that time, the home had a fair market value of $400,000 ( $40,000 of which was allocated to the land). The Hausers moved into the home in autumn of 2014, and Mark immediately set up his home office. The home's current fair market value is $500,000 ( $50,000 allocated to the land). County land records reflect that Mark's father bought the land in 1975 for $6,000 and built the house in 1979 at a cost of $60,000. Mark depreciates the business use of his home using MACRS. Additional 2021 costs related to the home are as follows: Utilities Repairs and maintenance Property/casualty insurance The 2021 property taxes and mortgage interest on the home are listed below. In addition to the repairs and maintenance noted above, Mark had the office repainted at a total cost of $1,200. Over the years, Mark has properly deducted the cost of all the furniture and equipment used in his office either as 179 expense or bonus depreciation in the year those assets were placed in service. On March 5, 2021, Mark purchased a heavy-duty, fire-resistant file cabinet with enhanced security features for $4,800. He made the acquisition to safeguard and maintain the privacy of client data. Consistent with past years, Mark prefers to avoid capitalizing and depreciating the cabinet if the law allows. 5. Suzanne is a licensed paralegal who is employed on a part-time basis by several local attorneys. She works in their different offices between the hours of 9 AM and 3 PM, three days a week. She commuted to work using the family Suburban a total of 813 miles and paid parking fees of $310. Her 2021 earnings and job-related expenses are summarized below. Combined wages reported on Form W-2s from three employers Subscriptions and dues to professional organizations Continuing education correspondence course Occupational license fee Since Suzanne is a part-time employee, her employers do not cover her job-related expenses. The correspondence course is required continuing education so she can retain her license. Suzanne is thinking about applying to law school, which would require her to sit for the LSAT Exam. During 2021, she spent $350 on an LSAT preparation course. Because Suzanne is a part-time employee, she is not covered by any of her employers' medical or retirement plans. During 2021 , she contributed $6,000 to a traditional IRA that she established several years ago. The Hausers use the automatic mileage method to calculate any tax deductions they are entitled to for use of the Suburban. Besides personal and household effects, Evelyn's major asset was a life insurance policy. As the sole beneficiary of the policy, Suzanne received $45,000 in death benefits on March 30,2021 . . In addition to the items already noted, the Hausers had the following receipts during 2021: At their yard sale, the Hausers sold used furniture, books, toys, and other household goods having an estimated original cost of $1,800. 12. In addition to the items already noted, the Hausers had the following expenditures for 2021 : Medical and dental bills for the Hausers (other than those relating to Evelyn) Cash charitable contributions (not including Evelyn's pledge) Ad valorem property taxes on personal residence Interest on home equity loan used to finance the purchase of a recreational vehicle in April 2021 Wyoming has no state or local income tax but does impose a 4% general sales tax. The county in which the Hausers live imposes an additional local sales tax of 1%. Although they do not keep track of their sales taxes, the Hausers paid $1,600 of sales tax on the recreational vehicle they purchased in April 2021. 13. Besides Evelyn, the Hausers' household includes two daughters, McKenna (age 19) and Kayleigh (age 16), and one son, Jared (age 14). McKenna graduated from high school in 2020 . She earned $19,000 during 2021 , all of which she put into her college savings account. She heads off to college in fall 2022. Kayleigh and Jared are full-time students in high school and middle school, respectively. Kayleigh earned $1,800 from a summer job which she put into her college savings account. 14. For tax year 2020 , the Hausers had a Federal income tax overpayment of $150, which they applied to their 2021 income tax. Suzanne's income tax withholdings for the year are $5,100, and the Hausers made Federal quarterly tax payments totaling $12,000 ( $3,000 each installment). 15. Relevant Social Security numbers are noted below. Assignment Using the tax preparation software accompanying the textbook, prepare the Hauser's 2021 Federal income tax return. Also, draft an accompanying letter that summarizes a few of the elements of the return that you believe should be highlighted. Returns must be submitted electronically in PDF format. Mark R. and Suzanne N. Hauser (ages 45 and 46) are married and live at 14130 Laramie Lane, Gillette, WY 82717. Mark is a consulting engineer and Suzanne is a paralegal. They file a joint return and use the cash basis for tax purposes. 1. Trained as a mining engineer, Mark has developed considerable expertise in the treatment and disposition of waste material. He is also well versed in the Federal and state requirements for land reclamation projects. Mark operates a consulting business through which he advises clients on these matters. Mark's business activity code is 541990 . Most of his clients are small and medium mine owner/operators located in Wyoming and contiguous states (e.g., Montana, Idaho, Utah). In performing his services, Mark usually visits a client's job site. He submits his recommendations in a written report to the client, which is accompanied by a billing statement for his services and reimbursement for all out-of-pocket expenses for travel to the job site. Mark received the following amounts from his consulting business in 2021: 2. Mark also provided services for three companies from his office, so there are no travel expenses. These fees are not included in the receipts listed in item 1 above. Pierce Mining: Work done in December 2021; payment received January 2022 Forrie Mining: Work done in December 2020; payment received January 2021 Garrett Mining: Work done in March 2021; no payment received to date In late 2021, Mark learned that Garrett Mining is going through bankruptcy. As a result, Mark does not expect to collect any of this fee. 3. Other expenses paid by Mark in 2021 relating to his practice are listed below. Contribution to H.R. 10 (Keogh) retirement plan Premiums on health insurance (covering self, spouse, and dependents) Supplies - landscape models purchased from topographer for projects Advertising in trade journals Office expense Business phone and Internet service State occupation license Subscriptions to trade journals Membership dues to trade associations $9,000 3,800 3,200 2,400 1,200 860 300 240 180 4. Mark operates his consulting business out of an office in his home that measures 24 feet by 25 feet. The total living space in the home is 3,000 square feet. Mark inherited the home on Laramie Lane from his father who died on June 6, 2014. At that time, the home had a fair market value of $400,000 ( $40,000 of which was allocated to the land). The Hausers moved into the home in autumn of 2014, and Mark immediately set up his home office. The home's current fair market value is $500,000 ( $50,000 allocated to the land). County land records reflect that Mark's father bought the land in 1975 for $6,000 and built the house in 1979 at a cost of $60,000. Mark depreciates the business use of his home using MACRS. Additional 2021 costs related to the home are as follows: Utilities Repairs and maintenance Property/casualty insurance The 2021 property taxes and mortgage interest on the home are listed below. In addition to the repairs and maintenance noted above, Mark had the office repainted at a total cost of $1,200. Over the years, Mark has properly deducted the cost of all the furniture and equipment used in his office either as 179 expense or bonus depreciation in the year those assets were placed in service. On March 5, 2021, Mark purchased a heavy-duty, fire-resistant file cabinet with enhanced security features for $4,800. He made the acquisition to safeguard and maintain the privacy of client data. Consistent with past years, Mark prefers to avoid capitalizing and depreciating the cabinet if the law allows. 5. Suzanne is a licensed paralegal who is employed on a part-time basis by several local attorneys. She works in their different offices between the hours of 9 AM and 3 PM, three days a week. She commuted to work using the family Suburban a total of 813 miles and paid parking fees of $310. Her 2021 earnings and job-related expenses are summarized below. Combined wages reported on Form W-2s from three employers Subscriptions and dues to professional organizations Continuing education correspondence course Occupational license fee Since Suzanne is a part-time employee, her employers do not cover her job-related expenses. The correspondence course is required continuing education so she can retain her license. Suzanne is thinking about applying to law school, which would require her to sit for the LSAT Exam. During 2021, she spent $350 on an LSAT preparation course. Because Suzanne is a part-time employee, she is not covered by any of her employers' medical or retirement plans. During 2021 , she contributed $6,000 to a traditional IRA that she established several years ago. The Hausers use the automatic mileage method to calculate any tax deductions they are entitled to for use of the Suburban. Besides personal and household effects, Evelyn's major asset was a life insurance policy. As the sole beneficiary of the policy, Suzanne received $45,000 in death benefits on March 30,2021 . . In addition to the items already noted, the Hausers had the following receipts during 2021: At their yard sale, the Hausers sold used furniture, books, toys, and other household goods having an estimated original cost of $1,800. 12. In addition to the items already noted, the Hausers had the following expenditures for 2021 : Medical and dental bills for the Hausers (other than those relating to Evelyn) Cash charitable contributions (not including Evelyn's pledge) Ad valorem property taxes on personal residence Interest on home equity loan used to finance the purchase of a recreational vehicle in April 2021 Wyoming has no state or local income tax but does impose a 4% general sales tax. The county in which the Hausers live imposes an additional local sales tax of 1%. Although they do not keep track of their sales taxes, the Hausers paid $1,600 of sales tax on the recreational vehicle they purchased in April 2021. 13. Besides Evelyn, the Hausers' household includes two daughters, McKenna (age 19) and Kayleigh (age 16), and one son, Jared (age 14). McKenna graduated from high school in 2020 . She earned $19,000 during 2021 , all of which she put into her college savings account. She heads off to college in fall 2022. Kayleigh and Jared are full-time students in high school and middle school, respectively. Kayleigh earned $1,800 from a summer job which she put into her college savings account. 14. For tax year 2020 , the Hausers had a Federal income tax overpayment of $150, which they applied to their 2021 income tax. Suzanne's income tax withholdings for the year are $5,100, and the Hausers made Federal quarterly tax payments totaling $12,000 ( $3,000 each installment). 15. Relevant Social Security numbers are noted below. Assignment Using the tax preparation software accompanying the textbook, prepare the Hauser's 2021 Federal income tax return. Also, draft an accompanying letter that summarizes a few of the elements of the return that you believe should be highlighted. Returns must be submitted electronically in PDF format