Tony and Jeannie Nelson are married and file a joint return. They have four children whose ages are: 5,17,18 & 23. The three youngest live at home with their parents and qualify as their dependents. The oldest Roger got married on 5/5 2021 and lives with his wife, Jane. The 18 year-old Tabitha is studying Fine Arts at Savannah College of Art & Design. During the summer she helps her mother put together the art exhibits. They provide you with the following information regarding their 2021 upcoming tax return:

1) Tony Nelson is an aerospace engineer he runs an engineering firm, Nelson Engineering (NE), as a sole proprietorship since 2010.

a) NE has very lucrative contracts with numerous aerospace companies and during 2021 it earned $647,000.

b) NE rents an office downtown where they meet with clients and conducts business. The rent includes all utilities. NE paid $36,000 in rent expense for 2021. In December 2021, the landlord offered to maintain the same yearly rent cost and Tony could receive an additional month's rent for free if he prepaid his 2022-year rent in advance. Tony agreed and paid an additional $36,000 on December 1, 2021 to cover January 2022 through January 2023 rent.

c) NE obtained a business loan from SunTrust Bank and paid $2,400 in prepaid interest for July 1, 2021 through June 30, 2022.

d) NE has a few employees, including an electrical engineer, a part-time engineering intern and an office manager. The combined wages for these employees were $197,000. Payroll taxes including for these employees is $15,000.

e) Tony took different business clients to see several home Miami Heat games during January and February of 2021 followed by dinners at nearby restaurants where business was discussed. The meals were not considered lavish. The total cost for the Heat tickets and accompanying meals were $900 and $600, respectively.

f) In April 2021, Tony flew to a two-day engineering convention held in Phoenix, AZ requiring a two-night hotel stay. While there, Tony noted that the convention dress code was formal when he thought it would be casual. Tony immediately purchased a business suit for $400 (not considered lavish) at a nearby department store. All food costs were covered by the convention organizers. Other trip costs that Tony paid were airplane ticket $400 and hotel lodgings cost $100ight for two nights.

g) The depreciation for the year on the fixed assets owned by NE are estimated to total $3,500.

h) All of NEs business transactions are properly documented and supported by receipts/invoices. In addition to deductible portion of the items listed above the business will have an additional $4,700 of deductible other expenses.

Tony & Jeannie Nelson Summary of Tax Return 2021 Subtotal Totals Explanation/Computations as needed Amount Description Salary & Wage Income Net Income from Nelson Engineering Net Income from Jeannie Art Interest Income S/T Capital Gains Other Ordinary Income Ordinary Income L/T Capital Gains 28% L/T Capital Gains 25% L/T Capital Gains 0/15/20 Other Income Total Gross Income Adjustments: Total Adjustments FOR AGI Adjusted Gross Income Itemized or Standard Deduction Qualified Business Deduction Total Deductions FROM AGI Taxable Income Ordinary Taxable income L/T Capital Gains 28% L/T Capital Gains 25% L/T Capital Gains 0/15/20 Taxable income Taxable income Tax on Ordinary Income Tax on LTCG 28% Tax on LTCG 25% Tax on LTCG 0/15/20 Tax on Taxable income Other Taxes: Net Investment Income Tax Self-Employment Tax Additional Medicare Tax Total Other Taxes Total Tax Credits: Child Tax Credit Total Credits Prepayments Total Credits & Prepayments Amount Due (Refund) Tony & Jeannie Nelson Summary of Tax Return 2021 Subtotal Totals Explanation/Computations as needed Amount Description Salary & Wage Income Net Income from Nelson Engineering Net Income from Jeannie Art Interest Income S/T Capital Gains Other Ordinary Income Ordinary Income L/T Capital Gains 28% L/T Capital Gains 25% L/T Capital Gains 0/15/20 Other Income Total Gross Income Adjustments: Total Adjustments FOR AGI Adjusted Gross Income Itemized or Standard Deduction Qualified Business Deduction Total Deductions FROM AGI Taxable Income Ordinary Taxable income L/T Capital Gains 28% L/T Capital Gains 25% L/T Capital Gains 0/15/20 Taxable income Taxable income Tax on Ordinary Income Tax on LTCG 28% Tax on LTCG 25% Tax on LTCG 0/15/20 Tax on Taxable income Other Taxes: Net Investment Income Tax Self-Employment Tax Additional Medicare Tax Total Other Taxes Total Tax Credits: Child Tax Credit Total Credits Prepayments Total Credits & Prepayments Amount Due (Refund)