Fill out the IRS required forms and/or schedules for a completeand accurate processable form. On these forms and/or schedules are203 line entries or boxes that must be checked. These must be madeto fill out the forms correctly.
Paul J. and Judy L. Vance are married and file a joint return.Paul is self- employed as a dentist, and Judy is a collegeprofessor. Paul and Judy have two children. The oldest is Vince wholives at home. Vince is a law student at the University ofCincinnati and worked part-time during the year, earning $1,500,which he spent for his own support. Paul and Judy provided $6,000toward Vince’s support. Jennifer is the youngest and lived in theVance’s home for the entire year. The Vances provide you with thefollowing additional information.
The Vances do not want to contribute to the presidentialelection campaign.
The Vances live at 621 Franklin Avenue, Cincinnati, OH45211.
Paul’s birthday is 3/5/1961 and his Social Security number is333-45-6666.
Judy’s birthday is 4/24/1964 and her Social Security number is566-77-8888.
Vince’s birthday is 11/6/1996 and his Social Security number is576-18-7928.
Jennifer’s birthday is 12/12/2009 and her Social Security numberis 613-97-8465.
The Vances do not have any foreign bank accounts or trusts.
Judy is a lecturer at Xavier University in Cincinnati, where sheearned $30,000. The university withheld federal income tax of$3,375, $1,860 of Social Security tax, and $435 of Medicare tax.She also worked part of the year for Delta Airlines. Delta paid her$10,000 in salary and withheld federal income tax of $1,125, SocialSecurity tax of $620, and Medicare tax of $145.
The Vances received $800 of interest from State Savings Bank ona joint account. They received interest of $1,000 on City ofCincinnati bonds they bought in January with the proceeds of a loanfrom Third National Bank of Cincinnati. Paul received a dividend of$540 on General Bicycle Corporation stock he owns. Judy received adividend of $390 on Acme Clothing Corporation stock she owns. Pauland Judy received a dividend of $865 on jointly owned stock inMaple Company. All of the dividends are ordinary dividends.
Paul practices under the name "Paul J. Vance, DDS." His businessis located at 645 West Avenue, Cincinnati, OH 45211, and hisemployer identification number is 01-2222222. Paul’s gross receiptsduring the year were $111,000. Paul uses the cash method ofaccounting for his business. Paul’s business expenses are asfollows:
Advertising $1,200
Professional dues $490
Professional journals for dentists $360
Contributions to employee pension plans $2,000
Malpractice insurance $3,200
Fine for overbilling State of Ohio for work performed on welfarepatients $5,000
Insurance on office contents $720
Interest on money borrowed to refurbish office $600
Accounting services $2,100
Miscellaneous office expense $388
Office rent $12,000
Dental supplies used in dental services for patients $7,672
Utilities and telephone $3,360
Wages $30,000
Payroll taxes $2,400
In June, Paul decided to refurbish his office. This project wascompleted and the assets placed in service on July 1, 2019. Paul’sexpenditures included $8,000 for new office furniture, $6,000 fornew dental equipment (seven-year recovery period), and $2,000 for anew computer. Paul elected to compute his cost recovery allowanceusing MACRS. He did not elect to use §179 immediate expensing andhe chose not to claim any bonus depreciation.
Judy’s mother, Sarah, died on July 2, 2018, leaving Judy herentire estate. Included in the estate was Sarah’s residence (325Oak Street, Cincinnati, OH 45211). Sarah’s basis in the residencewas $30,000. The fair market value of the residence on July 2,2018, was $155,000. The property was distributed to Judy on July 2,2018. The Vances have held the property and have managed itthemselves and they started renting the house to the same tenantstarting January 1, 2019.To compute depreciation on the house, theVances had allocated $15,000 of the property’s basis to the land onwhich the house is located. The Vances collected rent of $1,000 amonth during the months the house was rented during the year.
They incurred the following related expenses during thisperiod:
Property insurance $500
Property taxes $800
Maintenance $465
Depreciation (to be computed by you)
The Vances sold 200 shares of Capp Corporation stock onSeptember 3, 2018, for $42 a share. The Vances received the stockfrom Paul’s father on June 25, 1980, as an inheritance. Paul’sfather originally purchased the stock for $10 per share in 1967.The stock was valued at $14.50 per share on the date ofinheritance
Judy is required by Xavier University to visit several highschools in the Cincinnati area to evaluate Xavier Universitystudents who are doing their practice teaching. However, she is notreimbursed for the expenses she incurs in doing this. During thespring semester (January through April 2019), she drove herpersonal automobile 6,800 miles in fulfilling this obligation. Judydrove an additional 6,700 personal miles during 2019. She has beenusing the car since June 30, 2011. Judy uses the standard mileagemethod to calculate her car expenses.
Paul and Judy have given you a file containing the followingreceipts for expenditures during the year:
Prescription medicine and drugs (net of insurance reimbursement)$376
Doctor and hospital bills (net of insurance reimbursement)$2,468
Penalty for underpayment of last year’s state income tax $15
Real estate taxes on personal residence $4,762
Interest on home mortgage (paid to Home State Savings &Loan) $8,250
Interest on credit cards (consumer purchases) $595
Cash contribution to St. Matthew’s church $3,080
Payroll deductions for Judy’s contributions to the United Way$150
Fee for preparation of 2018 tax return paid April 12, 2019, of$500.
The Vances made timely estimated federal income tax payments of$1,700 each quarter during 2019. The Vances made the fourth-quarterpayment on December 31, 2019. They would like to receive a refundfor any overpayments.
