Nate and Ruth Fischer are married and file a joint return. They have three dependent children under the age of 15. None of their children
Nate and Ruth Fischer are married and file a joint return. They have three dependent children under the age of 15. None of their children work. The Fischers 2020 financial information follows:
Nates Salary $288,000
Ruths Salary $335,000
Interest from Plains National Bank $18,500
Interest from U.S. Treasury Bonds $12,500
Interest from state of California bonds $10,250
Dividends from Microsoft $13,000
Long term capital gain $34,000
Short term capital gain $18,000
Gambling winnings - lottery $20,000
Annuity payments received (Inv: $40,000, return $100,000) $40,000
Life Insurance Proceeds $450,000
Inheritance from Grandmother $750,000
Gift from family $420,000
Legitimate out of pocket medical expenses $72,000
Contributions to a Roth IRA $9,000
Mortgage interest ($1,250,000 principal) $78,000 (home acquired in 2018)
Real estate taxes (on value of homes) $19,800
Charitable contributions $32,000
Investment interest expense $69,000
K-1 Ordinary Income Ruth (LLC) $75,000- Eligible for QBI
K-1 Ordinary Loss - Nate (Partnership) ($35,000)- Eligible for QBI
K-1 Ruth S Corporation (Ordinary Income) $30,000 - Eligible for QBI
Federal Income Taxes withheld / paid during year 2020 $220,000
Sole Proprietorship for Nate- (Eligible for QBI)
Revenue $950,000
Salaries paid to his staff $172,000
Self Employed Medical Insurance $13,000 (be careful where you deduct these)
SEP Payments $46,000 (be careful where you deduct these)
Office expenses $19,500
Travel $19,000
Legal and professional fees $17,750
Rent expense $22,400
Business meals $16,400
Country club memberships $8,000
Payroll tax expense $17,250
Business gifts ($100 per gift to 8 customers) $800
Penalties and fines payable to State of Texas $6,500
Withdrawals by the business owner of cash $65,000 (these are owners draws)
Requirements
- Calculate the 2020 net profit from Nates Schedule C.
- Calculate the total 2020 self-employment tax for the Fischers
- Calculate 2020 Gross Income and Adjusted Gross Income.
- Calculate 2020 Itemized Deductions
- Calculate the 2020 Qualified Business Income Deduction
- Calculate the Fischers tax liability (including Self Employment taxes, Net Investment Income Taxes, and additional Medicare tax) and tax due/refund
- Using IRS fill in forms, Prepare the following 2020 tax return forms for the Fischers. Please include Forms 1040 with schedules 1-4 along with schedules A, B, C, D, E (page 2), SE-Long, Forms 4952, 8959, 8960. Be sure to order the forms properly and combine them into one PDF file for submission.
Please note you will submit two files for this assignment: 1) the Excel file for the case, and 2) A combined PDF file that includes all the aforementioned tax forms.
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