TAX FORM/RETURN PREPARATION PROBLEMS

Dave Stevens, age 34, is a self-employed physical therapist. His wife Sarah, age 31, teaches English as a Second Language at a local language school. Daves Social Security number is 111-11-1111. Sarahs Social Security number is 222-22-2222. Sarah and Dave have three

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Deductions and Losses Individuals 6-47

childrenAndrew, age 8; Isaac, age 6; and Mira, age 3. The childrens Social Security num- bers are, respectively, 333-33-3333, 444-44-4444, and 555-55-5555. They live at 12637 Pheasant Run, West Bend, Oregon 74658. They paid $8,900 in qualified residence interest and $2,400 in property taxes on their home. They had cash charitable contributions of $14,000. They also paid $180 to a CPA for preparing their federal and state income tax returns for the prior year, $100 of which was for the preparation of Daves Schedule C. Sarah and Dave earned interest on CDs of $3,200. Sarahs salary for the year is $32,000, from which $9,600 in federal income tax and $1,400 in state income tax were withheld. Daves office is located at Suite 402, 942 Woodview Drive, Portland, Oregon 74624, and his employer ID number is 11-1111111. Dave has been practicing for four years, and he uses the cash method of accounting. During 2019, Dave recorded the following items of income:

Revenue from patient visits Interest earned on the office

checking balance

The following expenses were recorded for the office:

Property taxes Mortgage interest Depreciation Malpractice insurance Utilities

Office staff salaries Rent payments on equipment Office magazine subscriptions Office supplies Medical journals

$300,000 225

$ 4,500 12,000 4,500 37,500 3,750 51,000 15,000 150 24,000 330

Dave pays $50 annually for use of a safety deposit box to store certain confidential docu- ments related to his business. In addition to his medical practice, Dave spends 15 hours every week managing his real estate investments. To make sure he is aware of all current investment strategies and best practices, he subscribes to the following journals:

Wall Street Journal $150 U.S. News &World Report 55 Money Magazine 45

Dave also prepaid $33,000 in estimated federal income taxes. Prepare Dave and Sarahs 2019 tax return (Form 1040, Schedules 1, 2, 3, A, B, C, SE, and Form 8995). Disregard any tax credits for which they may be eligible.