The following situations all occurred during 2020 (unless stated otherwise), andCharlie'shousehold includes the following persons:

S1 (Filing Status / Dependents).

(1) Charlie and Julie (calendar year taxpayers) file a joint return, and live with Max at 100 Morrissey Blvd, Boston, MA 02125. (2) Claudia (single) earns $15,000 as a part-time waitress in Chicago. She provides 40% of her own support whereas Charlie provides 60% of her support. Claudia studies at the University of Chicago as a full-time undergraduate student (Sophomore).Claudia's taxable salaries are $6,000.(3) Samuel (single) is an old buddy of Charlie and lives with Charlie during the entire year. Since Samuel has no gross income, Charlie provides 100% of support and maintains the household for Samuel.

(4) All of them are U.S. citizens.

S2 (Payroll / Employee Benefits).

(1) Charlie works for PwC, and his annual salary is $80,000. (2) PwC withholds $7,763 ofCharlie'ssalary for federal income taxes. (3) PwC provides all employees with (a) medical insurance(Charlie's insurance cost $5,000). PwC also offers a (b) group-term life insurance where the coverage amount for Charlie is $800,000. The monthly cost per $1,000 coverage is $0.15. Assume 12-month coverage. (4) Charlie lets KPMG withhold $5,000under the company's flexible benefits plan; $2,750 for medical and dental expenses and $2,250 for child-care expenses. (5) PwC has a qualified pension that covers all employees. Under the plan, PwC matchescontributions to the plan up to 5% of the employee's annual salary. Charlie makes the maximumallowable contribution, i.e., 10% of his annual salary.

S3 (Interest / Dividend).

(1) Julie received interest of $600 on saving account at KeyBanc. Charlie received interest of $800 on State of Massachusetts bond. (2) Charlie received dividends of $5,000 from Verizon Wireless Co. where he purchased the stock 2 days before the ex-dividend date and sold it 20 days after the ex-dividend date.

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	Relationship to Charlie	Social Security #
Charlie Brown (age 62)		123-45-6789
Julie Brown (age 45)	Wife	123-45-6788
Claudia Brown (age 21)	Daughter	123-45-6787
Max Brown (age 5)	Son	123-45-6786
Samuel Yellow (age 46)	Friend	987-65-4321

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S4 (Annuities / Social Security Benefits).

(1) Charlie purchased an annuity from an insurance company for $120,000. He is to receive $900 per month for life starting January 2020. His life expectancy is assumed to be 20 years from the annuity starting date (i.e., fixed payments). (2) Charlie has $12,000 of social security benefit. According to the formula, assume the taxable social security benefit is equal to $8,000.

S5 (Income Tax Refund from State/Local Government).

Charlie received a refund, $100, from the state of Massachusetts when he filed his state income tax return on March 17th, 2020. Assume Charlie claimed itemize deduction (not standard deduction) and deducted $5,000 of state/local income tax for his 2019 Federal tax return (which he also filed on March 17th, 2020).

S6 (Business Income or Loss).

(1)Julie is a dentist and operates "Julie's Smile" as asole proprietorship (accrual basis), which islocated at 200 Morrissey Blvd, Boston, MA 02125. The principal business is "Offices of Dentists," and the code is "621210." Julies, who materially participates in the business, has the following gross receipts and expenses related to her business:

gross receipts from patients $150,000 insurance premium for medical accidents $20,000 office rent $40,000 (2) Julie is considering opening a newrestaurantin Washington D.C. She incurs $1,000 for travel, $4,000 for consulting expenses, and $5,000 for market analysis. She did not acquire or start a new restaurant. (3) Julie made estimated quarterly payments of $1,600 during the year (i.e., each $400 quarterly payment). (4)If Julie's business has profit, self-employment taxes need to be considered.

S7 (Capital Gain or Loss).

Regardingcapital assetswhich Charlie had own, the following situations occurred: (1) LinkedIn Stock: date acquired 02/27/2020, date sold 12/08/2020, selling price $3,000, adjusted basis $2,800. (2) Google Bond: date acquired 10/19/2014, date sold 02/25/2020, selling price $4,000, adjusted basis $5,100. (3) Personal Car: date acquired 10/15/2020, date sold 12/24/2020, selling price $5,500, adjusted basis $5,000. In addition, Charlie had $2,500 of short-term capital loss carried from 2019 and $600 of long- term capital loss carried from 2019.

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advertising $10,000 equipment rental $30,000supplies $25,000

S8 (Prize / Personal Physical Injury).

(1) Julie had $30,000 of (reportable) gambling winnings. (2) Charlie got hit by a truck driver who had a blood alcohol level of .15. He received $40,000 of medical care, $8,000 of loss of income, and $22,917 of punitive damage.

S9 (Itemized Deduction).

(1) Charlie spends $17,500 on qualified medical and dental expenses not covered by insurance. He receives $2,750 from the flexible benefits plan for these expenses. (2) The following situations are related to state and local taxes:

1) During 2020, Charlie had $4,000 of state income taxes withheld in his W-2.

2) Charlie and Julie maintained their sales tax receipts where the total is $5,500. The optional sales tax amount given by the IRS table is $2,000. (3)The following situations are related to Charlie and Julie's personal home:

1) Charlie and Julie paid real estate taxes of $6,000 on their home.

2) Qualified interest on their home mortgage was $9,800. (4) Charlie and Julie contributed $5,000 cash to Boston Church and gave used clothing (fair market value of $700) to the Salvation Army. They also had $1,750 of charitable contribution carried over from 2019. The contribution limit is 30% of AGI. (5) Greedy Julie went to the casino several times. She lost $40,000 of her own money.

S10 (Child Tax Credit / Credit for Other Dependents).

First, determine who is eligible for the tax credit(s). Then, calculate the amount of tax credit(s).

S11 (Credit for Child and Dependent Care Expenses).

Charlie and Julie incurred qualified child-care of $7,000 for Max. Charlie received $2,250 from the flexible benefits plan for these expenses. The followings are the information regarding the care provider.

1) Name: "Learning Express" 2) Address: "300 Morrissey Blvd., Boston, MA 021253) EIN: 45-1111111

S12 (Education Tax Credit).

Charlie and Julie paid qualified tuition of $6,500 for Claudia.

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Required: Based on the information given above, determine the amount of 2020 tax due (or tax refund).You are required to submit the following14 documents: [1].Form 1040("U.S. Individual Income Tax Return") [2]. Form 1040-Schedule 1("Additional Income and Adjustments to Income")

[3]. Form 1040-Schedule 2("Additional Taxes") [4]. Form 1040-Schedule 3("Additional Credits and Payments") [5]. Form 1040-Schedule A("Itemized Deductions") [6]. Form 1040-Schedule B("Interest and Ordinary Dividends") [7]. Form 1040-Schedule C("Profit of Loss from Business") [8]. Form 1040-Schedule D("Capital Gains and Losses") [9]. Form 1040-Schedule SE("Self-Employment Tax") [10]. Form2441("Child and Dependent Care Expenses") [11]. Form8863("Education Credits") [12]. Form8949("Sales and Other Dispositions of Capital Assets") [13]. Form8995("Qualified Business Income Deduction Simplified Computation")[14].Separate formula sheet(s)explaining how you derived the number(s) in:

1. Form 1040, page 1 ("Dependents") 2. Form 1040, line 1 ("Wages, salaries, tips, etc.") 3. Form 1040, line 5b ("Taxable pensions and annuities") 4. Form 1040-Schedule C, part V("Other expenses") 5. Form 1040- Schedule 1, line 8 ("Other income") 6. Form 1040- Schedule A, line 1 ("Medical and dental expenses") 7. Form 1040- Schedule A, line 14 ("Gift to charity") 8. Form 1040- Schedule A, line 16 ("Other miscellaneous deductions") 9. Form 1040, line 8 ("Standard deductions or itemized deduction")

10. Form 8995, line 11 ("Taxable income before qualified business income deduction") and line 12 ("Net capital gain")

11. Form 1040, line 16("Tax") 12. Form 1040, lines 19 ("Child tax credit / credit for other dependents") 13. Form 2441, line 10 ("Tax liability limit") 14. Form 8863, line 19 ("Nonrefundable education credits") 15. Form 1040-Schedule 3, line 4 ("Retirement savings contributions credit")

Note: 1. You need not submit any other documents or tax forms than those required above. 2. It is important to submit your formula sheet (Item [#14]), so that you get partial credits for incorrect answers [refer to the formula sheet for the in-class exercise posted on Blackboard]. 3. Make sure the documents are readable.Occasionally, the tax forms are not saved properly. One recommendation is to change to name of the tax form when you attempt to save it. 4. Only one of the group members needs to submit the documents on Blackboard. 5. Each step of the process will be graded at a separate basis. Therefore, please finish throughout the end even though you feel uncertain about your answers in the middle steps. Please email me whenever you have any questions.