Use the following information to prepare the joint tax return for Joseph Perry & his wife Mary Perry using Form 1040, Schedule 1, Schedule 2, Schedule A, Schedule C, Schedule SE, Form 8829 and Form 8995.

Mary (SSN 624-48-1956) does not work & Joseph (SSN 562-48-9551) operates a consulting business out of his home, Joseph Perry, Consulting which was started in 2019. Their home is located at 126 Main Street, Bridgeport, CT. 06604. The IRS business code (Schedule C, Line B) is 541600. Joseph uses the cash bases and materially participates in the business. The following is the business’s simplified P&L for 2020:

Income- Gross Receipts		95,000
Expenses	Advertising	600
	Insurance other than health	1,500
	Office expense	800

On 01/01/2019, Joseph acquired the following assets for his business:

Assets	Cost	Life
Office furniture	2,500	7
Phone	1,000	5
Computer	2,000	5

Joseph drove his personal automobile 2,200 business miles during 2020. He uses the standard mileage rate method (57.5 cents per mile) to calculate his car expenses for Schedule C.

Joseph uses one of the rooms in his house regularly and exclusively as a home office. The size of the room used as an office is 450 square feet. The total square footage in his home is 3,750 square feet. The expenses of operating the home during the year included:

Utilities	8,000
Insurance	1,500
Home mortgage interest	18,000
Real estate taxes	8,000

The depreciable basis in the home is $300,000 ($350,000 minus $50,000 for the land). His depreciation percentage (Form 8829, line 41) is 3.64% (12months/330months).

a. Calculate the total depreciation for the business’s assets using the MACRS table provided. Then complete Form 8829, Schedule C, and Schedule SE(in that order) for Joseph Perry.

b. Please take a deduction for the maximum amount Joseph can contribute to a Simplified Employee Pension (SEP) Plan for 2020. This calculation is made by determining Joseph’s net profit from the business and subtracting the deduction for ½ the self-employment tax then multiplying that amount by 20%.Hint: This amount is entered on Schedule 1 line 15 and can’t be calculated until Schedule C and Schedule SE are prepared.

c. Complete Joseph’s Form 8995 to calculate the qualified business deduction. Hint: This amount is calculated by taking the net profit from the business (sch C ln.31) less the SEP deduction, less the deduction for ½ the self- employment tax, & less the medical insurance deduction. These subtractions from business net income are found on lines 14, 15, & 16 of schedule 1. This form can’t be completed until schedule C, schedule SE and the SEP deduction is calculated above.

d. Complete Mary & Joseph’s Form 1040 assuming that he makes the maximum contribution allowed to his SEP for 2020. Mary & Joseph have no dependentsand are in their mid- forties. They made federal estimated tax payments totaling $20,000 which is reported on line 26 of Form 1040. Mary & Joseph’s only other source of gross income is $850 of taxable interest and their only other deduction for AGI is $6,000 that Joseph pays during the year for health insurance.

In addition to the non-home office portion of the interest and taxes on his home, their other itemized deductions include $4,200 of state income taxes paid during the year, $3,000 of cash contributions to their church, and $120 of noncash contributions to Goodwill. Mary & Joseph do not want $3 to go to the Presidential election campaign fund.