This last research assignment requires you to analyze a couples tax scenario. They are asking you to forecast their 2020 tax return given the data provided below. It will be your responsibility to determine if the data provided is relevant to the tax return. See the items listed below:

• Blake and Miranda Shelton (both age 37) are married with one daughter, Sissy (age 7). They do not incur any child care expenses because she is picked up by her aunt after school.
• Blakes gross salary from his job working as an executive in the music industry was $70,000.
• Blake $7,000 contributed to his 401(k) plan via payroll deduction for the year. His W-2 reflected these deferrals.
• Mirandas salary from Plan Ahead Events, an S corporation, was $29,400.
• Miranda owns 20 percent of Plan Ahead Events outstanding stock.
  • Her prorated share of the companys ordinary business income was $14,000.
  • Her share of the companys net loss from rental real estate was $8,000.
  • She received a $6,000 cash distribution.
  • The ordinary income from Plan Ahead Events is considered qualified business income.
• Blake received a $10,000 cash gift from his wealthy uncle.
• Black won $5,000 from a winning lottery ticket in the Kentucky state lottery.
• The couple received a distribution from their investment in the Janus Fund that consisted of $700 of qualified dividends and $4,000 in long-term capital gain.
• Blake paid $12,000 alimony to a former spouse under a divorce decree entered into in 2015.
• The couple paid $15,000 of home mortgage interest expense and $3,000 property taxes on their personal residence.
• The couple paid $7,500 in state income tax and $4,000 in sales (state and local) taxes.
• Miranda contributed $2,400 ($200 per month) to the Shiloh Baptist Church.
• Blake had $5,000 of federal income tax withholdings and the couple paid $1,000 of quarterly estimated taxes of $250 each quarter.

1. S-Corporation K(1) line items (Chapter 10):
   1. Explain if Mirandas S corporations distributive share of the business income is subject to self-employment tax and if so, calculate the amount.
   2. Determine if the couple has a limitation on deducting the real estate loss based on the passive loss rules and RE exception based on AGI.
   3. Determine if S-Corp distribution is considered taxable and discuss.
2. Explain the relationship between the standard deduction and itemized deductions and which amount should your client deduct on their tax return, and why. The total itemized deductions will be computed by the spreadsheet (Chapter 14).
3. Explain the deduction to your client with a general explanation of its computation based on their given data (Chapters 10 and 14).