Use the following information to complete Thomas and Rachel McNeils Joint 2019 Federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.

PREPARE A 2019 RETURN!!!!!! Failure to prepare the tax return for the corresponding year will result in a significant reduction.

1.Thomas McNeil is employed as an airline pilot for Rocky Mountain Airlines in Denver, CO. Rachel is a business consultant. They have been married since 1998. Thomas and Rachel live in a home they purchased this year. Thomas and Rachel have three children who live with them all year, Robert (16), Denise (14) and Sara (10). These were their ages in 2019. They provide all of the support for their children and their children live with them. Thomas and Rachel provided the following personal information: a. Thomas and Rachel do not want to contribute to the presidential election campaign. b. Thomas and Rachel live at 21905 Inspiration Dr., Henderson, CO 80022 c. Thomass birthday is 10/12/1972 and his Social Security number is 555-55-5551 d. Rachels birthday is 7/16/1975 and her Social Security number is 444-44-4442 e. Roberts birthday is 6/30/2003 and his Social Security number is 454-54-5454 f. Denises birthday is 8/12/2005 and her Social Security number is 343-43-4343 g. Saras birthday is 5/13/2009 and her Social Security number is 232-32-3232 2. Thomas and Rachel received $550 in interest from City of Denver municipal bonds, $1,070 interest from US Treasury bonds, and $65 from their savings account at SCD Credit Union. Thomas and Rachel are joint owners of the City of Denver bonds and the US Treasury bonds. They have a joint savings account at SCD Credit Union. See attached Forms 1099-INT for each. 3. Rachel was involved in a car accident. Because the other driver was at fault, the other drivers insurance company paid Rachel $1,350 for medical expenses relating to her injuries from the accident and $300 for emotional distress from the accident. She received payment during the tax year. 4. Thomass father died, and Thomas received a $100,000 death benefit from his fathers life insurance policy. 5. Thomas and Rachel received a federal income tax refund of $975 from their 2018 federal income tax return in 2019. Thomas and Rachel did not itemize deductions in on their 2018 Return. 6. Thomass aunt Beatrice gave Thomas $18,000 because she wanted to let everyone know that Thomas is her favorite nephew. 7. Rachel won an iPad valued at $500 in a raffle at the annual fair held at Denises high school. 8. Thomas and Rachel have qualifying insurance for the entire family for the purposes of the Affordable Care Act (ACA).

3 of 3 9. Thomas goes gambling with some buddies on New Years Day of the tax year and wins $2,300 on a slot machine. However, he did not receive a W-2G for his winnings. 10. Rachel owns Mountainview Consulting, LLC, a business consulting prace. She earned total gross receipts (revenue) for the year from her tour guide business of $56,235. She uses the cash method of accounting. She was not issued a 1099-MISC or a 1099-K. The total revenues match the bank deposits she made for the year. Rachel is a sole proprietor and reports on the cash basis of accounting. Her her office address is: 975 Twisty Pines Ln, Denver, CO 80205. Her business is classified as a personal service and can be listed under Other Services with a business code of 999999. Rachel meets with clients virtually via Skype and Zoom, therefore she only commutes to the office and back home and does not make any trips to see clients and thus has no business milage or use of her personal vehicles. 11. From June 1 to December 31, Rachel incurred the following business operating expenses: Advertising $4,550 Insurance Expense 2,350 Interest Expense from loan 675 Legal/Accounting Exp 4,780 Office rent 18,200 Supplies 925 Meals (Client Business Lunches) 500 Rachel did not pay any individuals for services, so she is was not required to issue any 1099- MISC forms for this year. 12. Rachel also had the following start-up expenses for her business that she incurred during the year: Legal Consulting Fees 3,500 Accounting/Advisory Fees 1,050 13. Thomas and Rachel paid $24,000 in total mortgage expenses. Within these payments were $2,500 of property tax for the residence and $8,900 in interest expense. See attached Form 1098-MTG issued by their mortgage company. 14. Thomas and Rachel had $15,200 of additional medical expenses. This does not include the amounts used for injuries where they received reimbursement of their medical bills. 15. Thomas and Rachel own two vehicles a 2018 Ford Explorer and an Audi S4 2017 model. They paid $1,200 to register the Explorer. Of this $1,200 registration amount, $800 (i.e. $800/1,200) was in ownership tax and $400 (i.e. $400/$1,200) was in fees. They paid $1,400 to

4 of 3 register the Audi. Of that $1,400 registration amount, $1,100 was is ownership tax and $300 was in fees. 16. Thomas graduated from Metropolitan State University in 1995 and is a proud supporter of his Alma mater. He donated cash of $7,000 to their scholarship fund. The scholarship fund is appropriately classified as a charitable 501(c)(3) non-profit organization. 17. Rachel supports the Denver Dumb Friends league and donated $11,000 (cash) to them. The Denver Dumb Friends League is registered as a charitable 501(c)(3) non-profit organization. 18. Thomas had $5,724 of Colorado tax withheld during the 2019 year. This amount was reported on his W-2. Please answer no for all the questions under Filing & Estimate Payments under the Deductible Taxes Paid section when asked. 19. Thomas contributed $5,500 to his Roth Individual Retirement Account (Roth IRA). Rachel has also contributed $5,500 to her Roth IRA as well. They have no excess contributions from this year nor from prior years.