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Brian and Corrine Lee are married taxpayers filing jointly. They live in the home they own, located at $3301$ Pacific Coast Highway, Laguna Beach, CA $92651.$ Brian is an optometrist who owns his business; Corrine is a social worker for Orange County. They have two sons, Brady and Hank. During their trip to China last year, they fell in love with a beautiful one$-$year$-$old girl from an orphanage near Shanghai and are in the process of adopting her. The social security numbers of the four current members of their household are $412-34-5670$ for Brian, $412-34-5671$ for Corrine, $412-34-5672$ for Brady, and $412-34-5673$ for Hank. Their birth dates are as follows: Brian, $5/20/1976$; Corrine, $7/23/1976$; Brady, $9/1/2009$; and Hank, $10/12/2011.$ The following are Brian$$s income and expense information from his business and Corrine$$s W$-2$ from Orange County.

Brian$$s optometrist office income and expenses for the current year:

Gross income $ $271,355$

Cost of goods sold $($Beginning inventory $$45,000$; Purchases $$63,000$; Ending inventory $$20,000)$ Cost method used to value closing inventory $88,000$

Advertising $5,000$

Wages $32,000$

Office rent $9,600$

Other $2,100$

The Lees also made $$26,000$ in federal estimated tax payments during the year on the applicable due dates $($$$6,500$ per quarter$).$

The Form W$-2$ Corrine received from Orange County contained this information:

Wages $($box $1)=$ $ $76,925\mathrm{.}04$

Federal W$/$H $($box $2)=$ $ $9,956\mathrm{.}70$

Social security wages $($box $3)=$ $ $76,925\mathrm{.}04$

Social security W$/$H $($box $4)=$ $ $4,769\mathrm{.}35$

Medicare wages $($box $5)=$ $ $76,925\mathrm{.}04$

Medicare W$/$H $($box $6)=$ $ $1,115\mathrm{.}41$

State income taxes $($box $17)=$ $ $2,944\mathrm{.}89$

In addition, the Lees had the following income and expenses during the year:

Income

Interest from CDs at Pacific Coast Bank $ $3,665$

Expenses

Mortgage interest paid to PC Bank for their home $ $29,921$

Property taxes paid on their residence $7,000$

Adoption expenses $($fees$,$ court costs, and attorney$$s fees$)8,850$

Child care costs at LB Parks and Recreations $(550$ Main St$,$ Laguna Beach, CA $92651,$ EIN $94-3344556)$ after$-$school program for Hank $3,500$

Prepare the Lees$$ federal tax return. Use Form $1040,$ Schedule A$,$ Schedule B$,$ Schedule C$,$ and any additional appropriate schedules or forms they may need for credits. Do not complete Form $4562($with Schedule C$).($Assume no AMT although it may apply; Form $6251$ or the AMT calculation is not required.$)$ For any missing information, make reasonable assumptions. Assume that Brian follows cash basis of accounting. Use the appropriate Tax Tables or Tax Rate Schedules

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