Robert (SSN 123-45-6789) and Susan (SSN 123-12-1234) (both age 39) are married and have 2 children. Their son, Dylan, is 8 and their daughter, Harper, is 3. Susan sells pharmaceuticals for the Bendigo Drug Company. Robert is a teacher at the local junior high school. In the summer, Robert earns extra money as a self-employed house painter. Their income from their jobs is as follows:

Salary Federal WH State WH

Robert $35,000 $3,500 $1,250

Susan $55,000 $5,500 $2,750

Robert and Susan each contribute $5,500 to their individual retirement accounts.

In April, Susan and Robert go the horse track with Susans client Annie. Susan wins

$2,600 on the last race. The track withholds $780 for federal income taxes and $260 for state income taxes.

Robert hires college students to help him paint houses. This year, he hires 8 students

(two 4person crews). Robert shuttles between sites, supervising the jobs, talking to prospective clients, and painting. He treats the college students as independent contractors. His business generates the following income and expenses:

Revenues $112,000

Paint $33,100

Other materials $6,100

Insurance $5,500

Payments to student help $38,400

Business Auto 17,000 miles

During the year, Robert and Susan receive the following portfolio income:

Interest on savings account $1,900

Interest on U.S. Treasury bills $400

Cash dividends on stock $1,750

Interest on city of Buffalo bonds $600

Robert and Susan own 3,000 shares of Willis stock that they purchased in 2009 for $37,000. Early in 2020 they sell all the shares for $16,800. Robert and Susan also sell 100 shares of Sobey Corporation stock for a shortterm capital gain of $3,500 and 250 shares of the Bristol Corporation for a longterm capital loss of $7,250.

They pay investment interest of $550 during the year.

Robert and Susan own a 4 percent interest in a limited partnership. The limited partnership k-1

reports the following information to them:

Ordinary loss $2,100

Longterm capital gain $600

Charitable contribution $300

Cash distribution $2,400

During the year, the family spends 7 days at its summer home; they rent it to vacationers for 93 days during the year. Information pertaining to the rental is as follows:

Rental income $9,300

Interest on mortgage $4,450

Property taxes $1,600

Management fee $380

Repairs $320

Utilities $650

Insurance $420

Depreciation $7,000

One night, while returning home from a parentteacher conference at school, Robert is involved

in an automobile accident and is hospitalized for 7 days. He incurs $14,000 in medical expenses.

His health insurance policy reimburses him $11,800 of the costs.

The car is totally destroyed. It was purchased in 2016 for $19,500, and Robert finds a similar car

selling for $8,000. The insurance company reimburses him $6,700.

An analysis of Susan and Roberts checkbook reveals the following payments in 2020:

Automobile insurance $1,200

Homeowners insurance $420

Life insurance $750

Disability insurance $180

Country club dues $2,400

Optometrist $285

Veterinarian $275

Prescription drugs $175

Overthecounter medicine $320

Contribution to candidate for Congress $500

United Way $260

St. Philips Church $750

Randolph University $520

Auto property taxes $390

Tax preparation fee $1,175

Robert and Susan purchased their current home by paying $16,000 down and signing a $260,000 mortgage note, secured by the home. The home is worth $325,000, and the balance on the original mortgage is $234,000. They pay interest on their home mortgage of $14,700 during 2020. They also pay $310 in interest on their personal credit cards and $1,720 in property taxes on their home during 2020.

Prepare Robert and Susans taxable income for 2020, the tax on this income, the amount of

any refund or additional tax due, and any carryforwards. You should provide a summary

schedule of these calculations.

The completed Returns should be emailed to me by midnight Saturday December 5th 2020.

Note, if may use 2019 software to calculate. Your answers will be slightly off the 2020 numbers because of the cost of living adjustments but that is ok. I will grade based on the whichever years forms are used.

To use the software that is included with the book: Taxeducation.intuit.com