Prepare their 2017 Federal tax return and provide two ways they might save on their taxes in 2019 assuming everything stays the same as in 2018.

Frank and Elizabeth Thompson have provided you with the posted documents and the following verified information.

Frank and Elizabeth have 3 children and wish to file jointly. Franks DOB is 12-14-1970 and Elizabeths DOB is 4-17-1973. Their dependents are: Kenny a student at USC SSN 355-18-7772 DOB 4/27/1996, Wendy 356-30-2885 DOB 5/13/2000, and Elizabeths niece Brenda Kennedy 282-78-7905 DOB 3/12/2008 who has been living with the Thompsons since the death of her parents in March of 2009. The Thompson's are the sole means of support for Brenda, and Elizabeth was the sole beneficiary of $650,000 of life insurance benefits from Brendas parents estate intended to be used for Brendas support. The Thompsons have not received any social security payments for Brenda as yet. Interest earned on the life insurance totaled $26,050 for the year from Prudential Insurance and a 1099 was presented. This money is saved for Brendas education and minimal amounts are used for annual support (less than 50% of her living expenses).

Frank is a financial technology consultant and he has opened a consulting business Blue Ribbon Consultants 165 West Commerce Park, Holt Mi 48842. Frank is a cash basis taxpayer. He started the business on 6-6-2019 as a sole proprietor and he has had the following expenses in 2019 for which he has the appropriate documentation: Advertising $1,150; Insurance for property and general liability $1,775; Accounting 2,566, Rent $2,200 per month starting June 6; Office Supplies $1,650; Utilities $2,200, Misc. Publications $265, Internet service $830. He also paid an employment service $17,111 for a part time secretary. He traveled to several conventions and spent $2,366 on Hotels and $1,196 on food and he has provided receipts. He also entertained potential clients for $295. He drove to the most of the conventions and paid air expenses of $1,100 for one convention and he rented a car for a total of $396. All travel was over night and domestic. Frank purchased a computer system for $4,900, office furniture for $3,150 and other office equipment for $2,323 when he opened for business. He chose not to apply section 179 of the IRC. He drives a 2012 Chevy sedan (he purchased it used with a cost of $22,560 in 2013 and the current value is unknown. He uses the car 100% for business. He drove a total of 11,586 business miles including in that total 1,592 miles in March, April and May 2017 when he was preparing to open his business. Total miles for that car for the year were 19,283. He had the following automobile related business expenses: parking $258, interest on financing the vehicle $1,100, license plates of $166, Gas oil and maintenance of $2,140. A mileage log was used to verify the mileage.

Business revenue included $31,659 on his books plus the income from a School District reported on a Form 1099 MISC of $42,950 not on his books. The school district was a new client. He made estimated tax payments of $7,100 to the IRS and $3,500 to the State for the year. They paid $3,255 in additional Federal taxes due for 2018 on April 14, 2019 and $1,300 in additional State taxes due on the same date. They sold 300 shares of CMS stock for $13,720 on 6-7-2019 which cost $9,500 on 5-7-2000 and 100 shares of XCV for $976 on 7-7-2019 for which they paid $1,375 on 1-29-2009. They also sold 77 Shares of LTV for $11,980 which had a basis of $9,570 purchased on 1/29/2019 and sold on 11/22/2019. They received $1,230 of dividends of which $930 were qualified dividends. They also received $1,100 in interest from Series EE Savings Bonds that they cashed in March 3, 2019 which was used to help start the business.

Elizabeth is a Nurse and she occasionally must work in some of the hospitals specialty clinics. She drove her 2007 van ($27,000 original cost) a total of 32,155 miles of which 5,655 were for traveling to the clinics and 16,345 commuting to her job. The rest was personal use miles. She also incurred $543 in lunch expenses while at the clinics. Her employer does not reimburse Elizabeth for any expenses. Elizabeth is still paying on her student loans and she has paperwork indicating that she paid $2,675 in interest on the loans. Elizabeth also paid $326 for uniforms. Insurance on the van was $2,300 and the License plates cost $266. She bought a new watch for $110 on July 11, 2019 and she wonders if she can claim it as a deduction.

The Thompsons had the following personal items: Property tax of $3,655, Mortgage Interest of $11,966 and Private Mortgage insurance of $1,296 on a form 1098, gifts to their church of $6,622 cash, and paid $566 to have their taxes done in 2018. They did not itemize in 2018. They made a gift of $5,000 to Bens cousin Sid who lives in Portland Oregon. The health insurance premiums on their W2s were post tax and they had out of pocket medical, dental, and prescription expenses of $3,760. They traveled 550 miles for medical reasons. Elizabeth had withdrawn $10,000 from her IRA in 2019 to help pay for the business start-up expenses a Form 1099R was presented.