Unit $8$ Assignment

Donations to political campaign funds are not included in the forms as we do not have enough information to determine whether they are local.

Schedule A: medical, dental, state$-$local taxes, charity, home mortgage interest.

Form $1040$ required $(2021)$

Schedule $1,2$

Forms schedule A$,$ B$,$ C$,$ D$,$ and SE $$ These forms are required for tax year $2021$ and are used to report various types of income and deductions.

Form $8949$

Form $8995$

Kelly and Chanelle Chambers, ages $47$ and $45,$ are married and live at $584$ Thoreau Drive, Boston, MA $59483.$ Kelly$$s Social Security number is $111-11-1111,$ and Chanelle$$s is $222-22-2222.$ The Chambers have two children: Emma, age $23,$ and Chet, age $19.$ Their Social Security numbers are $333-33-3333$ and $444-44-4444,$ respectively. Emma is a single college student and earned $$8,000$ during the summer. Kelly and Chanelle help Emma through school by paying for her room, board, and tuition. Emma lives at home during the summer. Chet has a physical handicap and lives at home. He attends a local university and earned $$4,000$ working for a marketing firm. In sum, Kelly and Chanelle provide more than $50\%$ of both Emma$$s and Chet$$s total support for the year.

Kelly is a commercial pilot for a small airline. His salary is $$95,000,$ from which $$19,000$ of federal income tax and $$8,000$ of state income tax were withheld. Kelly also pays premiums for health, disability, and life insurance. $$2,000$ of the premium was for health insurance, $$250$ for disability, and $$400$ for life insurance. Chanelle owns Alliance Networks, a proprietorship that does network consulting. During the year, Chanelle$$s gross revenues were $$23,000.$ She incurred the following expenses in her business:

Liability insurance: $$700$

Software rental: $$5,400$ Journals and magazines: $$150$

Training seminars: $$1,200$

Supplies: $$1,300$ Donations to a political campaign fund: $$800$

Kelly enjoys playing guitar and plays in a band. Kelly$$s band has developed a local following. This year, his gross revenues were $$1,200$ for playing shows and $$700$ on CD sales. He incurred the following expenses: Studio rent expense: $$1,300.$

Sound system repairs: $$200$

CD production:$$500$

New guitar and amplifier: $$800$

Kelly$$s father passed away during the year. Kelly and Chanelle received $$100,000$ from the life insurance policy. Neither Kelly nor Chanelle paid any of the premiums.

Chanelle purchased $100$ shares of Thurston Co$.$ stock on May $1,1993,$ for $$1,000.$ Thurston Co$.$ was declared bankrupt during the current year.

Chet$$s physician recommended that he see a physical therapist to help with his dis$-$ability. Kelly paid the therapist $$7,000$ during the year because his insurance would not cover the bills. Kelly and Chanelle went to Las Vegas and won $$5,000$ at the blackjack table. The next night, they lost $$6,000.$ Kelly and Chanelle gave $$900$ to their church and during the year, they had the following other income and expenses: Real estate taxes: $$1,400$ Property taxes on car $($determined by value$)$: $$500.$

Home mortgage interest: $$9,000$

Credit card finance charges: $$2,600$ Tax return preparation fees $($$$600$ is allocable to Chanelle$$s business$)$: $$1,000.$

Sales tax on purchases during the year: $$6,200$

Interest from a savings account: $$800$

Interest from City of Boston Bonds: $$700$ Dividend from $3$M stock: $$400$ Prepare Kelly and Chanelle$$s tax return Form $1040$ and Schedules A$,$ B$,$ C$,$ D$,$ and SE for $2021.$ Assume the couple had no transactions involving virtual currency.