Prepare Tax Due (refund)

Edward and Emma Erickson are married and have two children. Edward is employed as a corporate controller and does consulting work as a sole proprietor. Emma is a stay-at-home mom. They had the following income and expenses during 2021:

Income:
Edwards Salary	230,000
Interest Income from USA Bank on savings account	1,200
Interest Income from City of Omaha bond	900
Gift from Edwards mother	20,000
Qualified Dividend Income from ABC Corporation	3,450
Life insurance proceeds on death of Emmas father	200,000
Value of Emmas inheritance from her fathers estate	150,000
Proceeds from asset sales*	(see next page)
Expenses:
Qualified Medical Expenses	14,400
Interest paid on credit cards	1,300
Home mortgage interest from Form 1098	7,850
Interest on car loan	1,250
State Income Tax Withholding	13,800
Federal Income Tax Withholding	41,400
Property taxes on automobiles	1,200
State sales taxes paid (per IRS tables)	1,800
Real estate taxes on home	5,200
Charitable contributions (cash contributions to public charity)	2,500
Employer provided Benefits:
Health insurance premiums, family coverage	15,000
Dental insurance, family coverage	2,000

Consulting business for Edward, a cash basis business using his SSN and name, information as follows:

Income:
Total sales	60,000
Expenses:
Office Supplies	650
Telephone	1,800
Accounting Fees ($300 to prepare Sch C, remainder for personal portion of 1040)	1,200
Legal Fees (business purposes)	400
Meals (consumed while discussing business with clients)	800
Advertising	900
Business liability insurance	350

Additional information regarding Edwards consulting business:

Miles: 3,500; all business miles, (Edward uses the standard mileage rate). Vehicle is a 2020 Cadillac Escalade, put in service 7/1/20. This is their third vehicle. Home Office (Edward wants to use the safe harbor amount) The office is 400 square feet, and their total house is 5,000 square feet.

Edward did not need to file 1099s for 2021.

*The proceeds from asset sales came from three separate transactions during 2021:

• On November 20^th, Edward sold 450 shares of XYZ Corporation stock for $15/share. He had originally bought those shares on February 5, 2021, for $8/share.
• Also, on November 20^th, Edward sold 500 shares of MNO Corporation stock for $52/share. He bought those shares on March 21, 2011, for $55/share.
• On December 15^th, Emma sold a piece of land that she inherited from her fathers estate, which closed on October 17, 2021. She received $35,500 of proceeds. Emmas dad paid $6,000 for that land in 1990 and on the date of her fathers death, January 7, 2021, it was worth $30,000.

The Ericksons have a $2,000 short-term capital loss carryover from the prior year.