The following information is GIVEN:

Sch K-1:

(-) ordinary business income = $22,750.00

(-) Charitable contributions = $800

1098-T:

(-) Payments received for qualified tuition and related expenses = $1,372.25

1099-INT:

(-) Interest Income = $1,372.25

1099-DIV:

(-) Total Ordinary Dividends = $250

(-) Qualified Dividends = $250

1099-DIV:

McGladrey

(-) Wages, tips, other compensation = $87,500

(-) federal income tax withheld= $21,875

(-) social security wages = $87,500

(-) social security tax withheld= $5,425

(-) medicare wages and tips= $87,500

(-) medicare tax withheld= $1,268.75

Grant Thornton

(-) Wages, tips, other compensation = $5,792

(-) federal income tax withheld= $1,158.40

(-) social security wages = $5,792

(-) social security tax withheld= $359.10

(-) medicare wages and tips= $5,792

(-) medicare tax withheld= $83.98

QUESTION:

COMPLETE THE FOLLOWING TAX FORM: ..........

(1) Form 8863

7 Our clients Joe Kennedy, DOB: 6/24/1972, SS# 993-01-2019 and Lucreita Kennedy, DOB: 7/28/1969, SS# 992- 34-0059 have been married for 25 years. 1 2 They live at 1245 Flagler Avenue Coral Gables, FL 33143. 3 Joe is an accountant and Lucreita is an excel consultant. Luiciana, their child was born 3/25/1999. Luiciana has received a 1098-T for attending the first semester at 4 Coral Gables Community College SS#,990-50-0033. Luiciana is a fulltime student and lived at home and Avery, their new baby was born 6/28/2019. Her SS number is, 986-67-0045. Andrew Hernandez born 3/27/2011, SS# 987-67-0013 is a first cousin of Lucreita and lived with her since February of 2019. Lucreita provided 80% 5 of Andrew's support. Andrew's total income for the year was $3,000.00. Joe received a W2 from McGladrey and a W2 from Grant Thornton, and did not participate in an employer 6 provided retirement plan during the year. Lucreita inherited $ 90,000 from her grandfather in September 2019. Lucreita received a K1 from MNH Corp. in which she did not materially participate although all her money was at risk. Lucreita paid estimated federal taxes of $4,095.00. 8 They received a 1099-INT from Metropolitan Bank and $1,110 from Coral Gables Municipal General Revenue Bonds. As per a 1098-1, Joe and Lucreita paid Wells Fargo Bank $8,900.00 in interest for the home mortgage. They also 9 paid $3,875.00 in real estate taxes, $2,416.00 for homeowners insurance on the home and $241.60 to have it Other interest and taxes paid by Joe and Lucreita include: $1,220.00 interest on the loan for the Dodge, the personal automobile which is shared with Luciana, $571.00 interest on credit cards and general sales tax of 10 $2,400.00 for which they have receipts. Note: the general sales tax rate is 7.00% The total annual cost of medical insurance for the entire family was $15,121.00 and paid by Joe through an employer provided health insurance plan on an after-tax basis. Joe and Lucreita paid $2,797.00 for prescription drugs, $800.00 to doctors and dentists, and $2,875.00 to hospitals and clinics. These amounts were co-payments or amounts not covered by insurance. Contact lenses for Luciana that was not covered by insurance cost $600.00 11 and cosmetics and other non prescription items from the drug store cost $300.00. Lucreita started Coral Gables Consulting, as a cash method sole proprietorship, on April 15, 2009. The 2019 revenue associated with the business was $24,800.00. The following expenses were incurred $1,636.00 advertising, $8,750.00 supplies and postage of 12 $323.73. She uses a desk in the corner of her bedroom as her office. Lucreita uses a cell phone for business and another cell phone for non-business calls. The cost of the business 13 cell phone was $2,582.00, while the cost of the private phone was $600.00. Lucreita uses a cell phone for business and another cell phone for non-business calls. The cost of the business 13 cell phone was $2,582.00, while the cost of the private phone was $600.00. Joe and Lucreita have the requisite statements from the charities supporting the following contributions to 14 qualified charitable organizations: (-) Cash of $2,400.00 given to Plymouth Church in Coral Gables on 3/6/2019. (-) A sofa given to Goodwill in Coral Gables on 3/7/2019. The sofa was purchased on 6/28/2014 for $1,160.00 and the fair market value (based upon comparable sales in thrift shops) at the date of contribution was $185.00. (-) One hundred shares of Home Depot Inc. was given to the Northeastern University. The stock was purchased on 1/5/2017 for $1,400.00. When it was donated on 10/3/2019 it had a value of $2,800.00 based on the sale of other shares that same day. 15 Joe and Lucreita sold 200 shares of Home Depot Inc. stock. The stock was purchased on 1/5/2019 for $2,800.00 and was sold on 10/3/2019 for $5,600.00. On 12/7/2019 they sold 200 shares of Sub Prime Mortgage 16 Corporation for $1,650.00 which cost $5,300.00 when purchases on 3/1/2010. Joe paid $215.00 for subscriptions to professional journals and attended a professional conference in New Orleans. He paid a registration fee of $200.00, $371.00 for airfare, $568.00 for hotel and $230.00 for meals. 17 These items were not reimbursed. In July of 2019, Lucreita received $75.00 for jury duty pay. Joe and Lucreita paid $140.00 in April of 2019 for the preparation of the 2018 tax return and $50.00 for a safe 18 deposit box rental fee that was used for the storage of investment securities. Lucreita contributed $2,800.00 to a traditional individual retirement account on December 18, 2019. This was 19 the first time she contributed to an IRA. On September 8, a freak tornado damaged their home. They filed a claim with their insurance company but received only $11,000.00 due to the high deductable on their policy. The home had a cost of $260,000.00 when they purchased it on 7/2/2001. It 20 was valued at $330,000.00 before the incident and $270,000.00 immediately after. Joe and Lucreita went to Las Vegas three times in 2019. The total cost of airfare, transportation, meals and expenses were $6,000.00. During the year the gambling winnings were $4,800.00 while the gambling losses were 21 $5,400.00. A W-2G was not received. 7 Our clients Joe Kennedy, DOB: 6/24/1972, SS# 993-01-2019 and Lucreita Kennedy, DOB: 7/28/1969, SS# 992- 34-0059 have been married for 25 years. 1 2 They live at 1245 Flagler Avenue Coral Gables, FL 33143. 3 Joe is an accountant and Lucreita is an excel consultant. Luiciana, their child was born 3/25/1999. Luiciana has received a 1098-T for attending the first semester at 4 Coral Gables Community College SS#,990-50-0033. Luiciana is a fulltime student and lived at home and Avery, their new baby was born 6/28/2019. Her SS number is, 986-67-0045. Andrew Hernandez born 3/27/2011, SS# 987-67-0013 is a first cousin of Lucreita and lived with her since February of 2019. Lucreita provided 80% 5 of Andrew's support. Andrew's total income for the year was $3,000.00. Joe received a W2 from McGladrey and a W2 from Grant Thornton, and did not participate in an employer 6 provided retirement plan during the year. Lucreita inherited $ 90,000 from her grandfather in September 2019. Lucreita received a K1 from MNH Corp. in which she did not materially participate although all her money was at risk. Lucreita paid estimated federal taxes of $4,095.00. 8 They received a 1099-INT from Metropolitan Bank and $1,110 from Coral Gables Municipal General Revenue Bonds. As per a 1098-1, Joe and Lucreita paid Wells Fargo Bank $8,900.00 in interest for the home mortgage. They also 9 paid $3,875.00 in real estate taxes, $2,416.00 for homeowners insurance on the home and $241.60 to have it Other interest and taxes paid by Joe and Lucreita include: $1,220.00 interest on the loan for the Dodge, the personal automobile which is shared with Luciana, $571.00 interest on credit cards and general sales tax of 10 $2,400.00 for which they have receipts. Note: the general sales tax rate is 7.00% The total annual cost of medical insurance for the entire family was $15,121.00 and paid by Joe through an employer provided health insurance plan on an after-tax basis. Joe and Lucreita paid $2,797.00 for prescription drugs, $800.00 to doctors and dentists, and $2,875.00 to hospitals and clinics. These amounts were co-payments or amounts not covered by insurance. Contact lenses for Luciana that was not covered by insurance cost $600.00 11 and cosmetics and other non prescription items from the drug store cost $300.00. Lucreita started Coral Gables Consulting, as a cash method sole proprietorship, on April 15, 2009. The 2019 revenue associated with the business was $24,800.00. The following expenses were incurred $1,636.00 advertising, $8,750.00 supplies and postage of 12 $323.73. She uses a desk in the corner of her bedroom as her office. Lucreita uses a cell phone for business and another cell phone for non-business calls. The cost of the business 13 cell phone was $2,582.00, while the cost of the private phone was $600.00. Lucreita uses a cell phone for business and another cell phone for non-business calls. The cost of the business 13 cell phone was $2,582.00, while the cost of the private phone was $600.00. Joe and Lucreita have the requisite statements from the charities supporting the following contributions to 14 qualified charitable organizations: (-) Cash of $2,400.00 given to Plymouth Church in Coral Gables on 3/6/2019. (-) A sofa given to Goodwill in Coral Gables on 3/7/2019. The sofa was purchased on 6/28/2014 for $1,160.00 and the fair market value (based upon comparable sales in thrift shops) at the date of contribution was $185.00. (-) One hundred shares of Home Depot Inc. was given to the Northeastern University. The stock was purchased on 1/5/2017 for $1,400.00. When it was donated on 10/3/2019 it had a value of $2,800.00 based on the sale of other shares that same day. 15 Joe and Lucreita sold 200 shares of Home Depot Inc. stock. The stock was purchased on 1/5/2019 for $2,800.00 and was sold on 10/3/2019 for $5,600.00. On 12/7/2019 they sold 200 shares of Sub Prime Mortgage 16 Corporation for $1,650.00 which cost $5,300.00 when purchases on 3/1/2010. Joe paid $215.00 for subscriptions to professional journals and attended a professional conference in New Orleans. He paid a registration fee of $200.00, $371.00 for airfare, $568.00 for hotel and $230.00 for meals. 17 These items were not reimbursed. In July of 2019, Lucreita received $75.00 for jury duty pay. Joe and Lucreita paid $140.00 in April of 2019 for the preparation of the 2018 tax return and $50.00 for a safe 18 deposit box rental fee that was used for the storage of investment securities. Lucreita contributed $2,800.00 to a traditional individual retirement account on December 18, 2019. This was 19 the first time she contributed to an IRA. On September 8, a freak tornado damaged their home. They filed a claim with their insurance company but received only $11,000.00 due to the high deductable on their policy. The home had a cost of $260,000.00 when they purchased it on 7/2/2001. It 20 was valued at $330,000.00 before the incident and $270,000.00 immediately after. Joe and Lucreita went to Las Vegas three times in 2019. The total cost of airfare, transportation, meals and expenses were $6,000.00. During the year the gambling winnings were $4,800.00 while the gambling losses were 21 $5,400.00. A W-2G was not received