William A. and Sandra S. Taxpayer (ages 61 and 60, respectively) are husband and wife who live at 99 Beach Landing, Dana Point, CA.
William is a self-employed consultant specializing in transactions involving media properties and Sandra is a speech and hearing specialist for a local school district.
William earned gross consulting fees of $225,000 in 2019.
He maintains his own office in his home and pays for all business expenses.
The Taxpayers are adequately covered by the medical plan provided by Sandras employer but have chosen not to participate in its 401(k) retirement plan.
William employment-related expenses for 2019 are summarized below.
Airfare	$18,500
Lodging	$9,200
Meals (during travel status)	$7,000
Entertainment	$3,600
Ground transportation (e.g., airport shuttles, rental cars, and taxis)	$1,500
Business gifts	$2,000
Professional Memberships and Licenses	$1,000
Office supplies (includes postage, overnight delivery, and copying)	$1,500
The entertainment involved taking clients to sporting and musical events.
The business gifts consisted of $50 gift certificates to Amazon.
These were sent by William during the Christmas holidays to 40 of his major clients.
In addition, William drove his 2017 Honda CRV 11,000 miles for business and 4,000 for personal use during 2019. He purchased the CRV on April 28, 2017;
William always has used the automatic (standard) mileage method for tax purposes.
Parking and tolls relating to business use total $500 in 2019.
When the Taxpayers purchased their present residence in April 2016, they devoted 500 of the 2,500 square feet (20%) of living space to an office [principal place of business] for William.
The property cost $1,200,000 ($400,000 of which is attributable to the land) and has since appreciated in value.
Expenses relating to the residence in 2019 (except for mortgage interest and property taxes; see below) are reported as follows.
Insurance	$2,600
Repairs and maintenance	$900
Utilities	$4,700
Painting office area; area rugs and plants (in the office)	$1,800
In terms of depreciation, the Taxpayers use the MACRS percentage tables applicable to 39-year nonresidential real property.
As to depreciable property (e.g., office furniture), William tries to avoid capitalization and uses whatever method provides the fastest write-off for tax purposes.
Sandra works at a variety of schools as a traveling speech pathologist.
She provides her own transportation between locations.
Sandras salary for the year is $65,000, and her Form W2 for the year shows income tax withholdings of $8,000 (Federal) and $3,000 (state) and the proper amount of Social Security and Medicare taxes.
In addition to those items already mentioned, the Taxpayers had the following receipts during 2019.
State Tax Exempt Bonds	$5,000
Corporate Bonds	$2,000
Interest on Certificates of Deposit and Bank Accounts	$1,800
Additional expenditures for 2019 include the following.
Real Property Taxes on Personal Residence	$9,500
California Income Tax due (Paid April 2019 for Tax Year 2018)	$400
Mortgage Interest on personal residence	$8,000
Pledge to Religious Entity	$5,000
Traditional IRA Contributions
William	$8,000
Sandra	$8,000
In 2019, the Taxpayers made quarterly estimated tax payments of $10,000 (Federal) and $1000 (state) for a total of $40,000 (Federal) and $4,000 (state).
Compute William and Sandras joint Federal income tax for 2019. Disregard the alternative minimum tax (AMT) and various education credits.
Also, they want any overpayment of tax refunded to them and not applied toward next years tax liability. Note that William will have a self-employment tax liability.