Please complete the 2020 federal income tax return for Diana and Dana Foley. If something is unclear to you or required information is missing, please use Discussion Board to obtain guidance. Diana and Dana Foley live in Plymouth, Vermont. Diana is 43 years old and the Vice-President of Operations at a small start-up company. Dana is 45 years old and a former human resource executive who currently consults with former clients. The Foleys have two children Rebecca (age 19) and Alan (age 16). Rebecca does not work and is a full-time college student. Alan is a high school student and works for a local hardware store during the summer and earned $6,500 in 2020. The Foleys plan to file a joint tax return and provided the following information: Dianas social security number is 201-33-4444 Danas social security number is 301-44-5555 Rebeccas social security number is 401-55-6666 Alans social security number is 501-66-7777 Mailing address is 23 Brewster Street, Plymouth, Vermont 00403 Diana Foley reported the following information relating to employment during the year: Employer Gross Wages Federal Income Tax Withholding State Income Tax Withholding Alternative Energy $139,325 $26,230 $8,500 Dianas employer withheld all payroll taxes it was required to withhold. The entire Foley family was covered by minimum essential health insurance during each month in 2020. The insurance was provided by Dianas employer. In May, Diana was injured in an accident. The injury prevented Diana from working for about two months. During this time, Diana received $15,000 in disability payments attributable to a disability insurance policy. The disability policy premiums were paid by Dianas employer as a nontaxable fringe benefit. Dana Foley uses the cash method to account for business activities, which were as follows: Consulting revenue was reported to Dana on a Form 1099-MISC, Box 7 Hightop Products $32,000 Jensens Health Services $8,500 Strategic Solutions $4,750 During the year, Dana paid the following business expenses: Office expenses $520 Professional license fees $375 Airfare $2,900 Hotel $1,200 Meals $390 Parking $320 Dana has a small office area (150 square feet) in the home and uses the simplified method to determine the home office deduction. The total square footage of the Foleys home is 2,200. Dana drove 520 business miles for consulting-related activities. Dana drove a 2017 Toyota purchased on January 1, 2017 for all business mileage. Dana drove the vehicle a total of 10,305 miles during the year for all purposes. Dana has written documentation to support the mileage amounts and also has access to another vehicle for personal purposes. Dana made the following estimated tax payments in 2020: $4,000 for Federal income taxes and $2,000 for state income taxes. Dana is a 20% owner in an advertising agency named Natural Ideas, Inc. (NI) (EIN 89-1234567). NI is a Subchapter S corporation. The company reported ordinary business income for the year of $140,000. Dana received a K-1 from NI reporting allocation of this business income. Dana acquired the stock several years ago. Danas basis and at-risk amount in the stock before considering the 2020 income allocation was $52,000. Dana is a passive owner with respect to this entity. Dana is also a 20% owner in Super Shine, Inc. (SS) (EIN 21-9876543). SS is a Subchapter S corporation. The company reported an ordinary business loss for the year of ($80,000). Dana received a K-1 from SS reporting allocation of this business loss. Dana acquired the stock several years ago. Danas basis and at-risk amount in the stock before considering the 2020 loss allocation was $35,000. Dana is a passive owner with respect to this entity. The Foleys also received the following investment income during the year: Interest income from First Bank of Vermont $320 Interest income from Plymouth, VT School District Bond $200 Interest income from U.S. Treasury Bond $1,750 Qualified dividends income from Microsoft $2,350 Dividend income (not qualified) from Rio Grande Fund $2,150 The Foleys did not own, control or manage any foreign bank accounts, nor were they grantors or beneficiaries of a foreign trust during the tax year. The Foleys had the following activity in their brokerage account during the year. All transactions were reported on a Form 1099-B and basis information on each stock sale was reported to the IRS. Sold 2,000 shares of Microsoft 7/7/20 $22,500 Sold 100 shares of Apple, Inc. 4/4/20 $35,750 Sold 150 shares of Union Pacific 6/6/20 $2,750 Relevant tax basis/holding period information related to sales of securities in the current year: Purchased 2,000 shares of Microsoft on 5/5/20 for $21,000 Purchased 200 shares of Apple, Inc. on 3/3/15 for $86,000 Purchased 300 shares of Union Pacific on 9/9/19 for $6,000 The Foleys paid the following expenses during the year: Dentist (unreimbursed by insurance) $1,500 Doctors (unreimbursed by insurance) $ 2,425 Prescriptions (unreimbursed by insurance) $675 Real property taxes on residence $6,525 Vehicle property tax based upon value $850 Mortgage interest on principal residence $12,050 Margin interest paid on brokerage account loan $500 Fee paid to Mouser, Johnson, and Hintze CPAs for tax preparation $1,200 Contribution to United Way $2,000 Contribution to American Cancer Society $5,000 The Foleys also donated clothing, electronics, furniture and other household goods to the Salvation Army of Plainville, Vermont on April 15, 2020. The Foleys estimated that their cost of donated items was $5,000. Estimated thrift value of the goods donated was $375. During the year, the Foleys paid a portion of Rebeccas tuition to attend The College of Liberal Arts (CLA). They also purchased Rebeccas school books. Rebecca attended Fall20 semester as a full-time student. In total, the Foleys paid $9,000 for tuition and $2,000 for books. Rebecca used $6,000 from a scholarship received from CLA to pay the remaining $6,000 of tuition for the year. Rebecca was not required to perform any services as a condition of accepting the scholarship.

Your second tax return assignment is to prepare the 2020 Form 1040 (including all required attachments and schedules) for Diana and Dana Foley