I need a step-by-step Tax Analysis done on this Case Study.

CASE 1 GEORGE AND LAURA FREEMAN CASE Today is January 1, 2020 INTRODUCTORY DATA The Family George Freeman (age 46) is the owner of a tool and die company, GMED Manufacturing Inc., (GMED) and is married to Laura Freeman (age 46) who is a self-employed graphic designer. They have four children: Jordan (age 7), Colin (age 5), Cate (age 3), and Caroline (age 1). George and Laura have been married for 11 years. George's salary is $235,000. Their net worth is approximately $1.9 million at this time; of which $1.0 million is the value of his business, GMED. Laura has an office, but primarily works from home so that she can also take care of the children. She has no employees and has Schedule C net income of $100,000 per year. Financial Goals & Concerns 1. They want to provide for their children's college education (4 years each) expected to cost $25,000 per year in today's dollars. 2. They want to save for weddings for each of their three daughters. They expect the weddings will cost $40,000 each in today's dollars and want to plan that each child will marry at age 23. They believe wedding costs are subject to general inflation 3. They want to retire debt free when they are age 62 (when they both plan to retire). 4. They initially define adequate retirement income as 80% of preretirement income. 5. They want to have adequate risk management coverage. 6. In case of his death, George is primarily concerned with providing income for Laura for the duration of her life and secondarily, leaving the remainder of his estate to their children. 7. George and Laura have mutually agreed to buy Colin a Porsche or give him the equivalent amount of money as they pay for the girls' weddings at his age 23. They have not yet told Colin. 8. They want to have an appropriate investment portfolio. 9. They want to have an appropriate estate plan. NTERNAL INFORMATION financial Statements fatement of Financial Position Assets Statement of Financial Position George and Laura Freeman Balance Sheet as of 1/1/2020 Liabilities and Net Worth Current Liabilities $25.000 W Credit Cards $5.000 $100,000 IT Mortgage. Principal Residence $13.722 $125.000 H Mortgage - 2nd Home $7.221 Total Current Liabilities Carrelsets Cash & Checking Torrent Assets 525943 estment Assets MED Manufacturing, Inc # Bokerage Account H Cash Value of Life Insurance 529 Savings Plans # 401(k) Plan Employee Deferral W Traditional IRA W Roth IRA Total investment Assets $25.000 $723,079 $93.628 Long-Term Liabilities W Credit Card IT Mortgage - Principal Residence H Mortgage - 2nd Home Total Long-Term Liabilities $1,000,000 $500,000 $60.000 $46,000 $50,000 $15.000 $20,000 $841,707 $1,691,000 Total Liabilities $867,650 Total Net Worth Personal Use Assets IT Principal Residence H 2nd Home IT Personal Property H Car #1 W Car # 2 H Snowmobiles Total Personal Use Assets Total Assets $600,000 $220,000 $100,000 $25,000 $35.000 $25,000 $1.953.350 $1,005,000 $2,821,000 Total Liabilities & Net Worth $2.821,000 1. Assets are stated at fair market value. 2. Liabilities are stated at principal only as of December 31, 2019 before January payments. 3. This is George's 100% interest and the value is based on his estimate. 4. These are for the children. George currently saves $6,000 per year into these accounts (see portfolio). 5. Land value is $50,000 Title Designations: HHusband (Sole Owner) W Wife (Sole Owner) IT-Joint Tenancy with Survivorship Rights tatement of Income and Expenses Statement of Income and Expenses George and Laura Freeman Statement of Income and Expenses Expected (Approximate) For This Year (2020) Totals $235,000 $100,000 Cash Inflows George's Salary Laura's Salary Total Cash Inflows $335,000 Cash Outflows Savings Brokerage Account 401(k) Plan- Employee Deferral 529 Savings Plans $6,500 $18,000 $6,000 Total Savings $30,500 Taxes" Federal Income Taxes Withheld George's Social Security Taxes Laura's Social Security Taxes George's Social Security - Additional 0.993 Property Tax Principal Residence Property Tax 2nd Home $51,025 $11,648 $14,130 $315 $8,000 $5,926 $91,044 $57,557 $14,051 $5,000 $76,608 $5,000 Total Taxes Debt Payments (Principal & Interest) Mortgage - Principal Residence Mortgage - 2nd Home Credit Cards Total Debt Payments Living Expenses Utilities Principal Residence Mountain Condo Expenses (net of rental income of $5,000) Gasoline for Autos Lawn Service Entertainment Vacations Church Donations Clothing Auto Maintenance Satellite TV Food Miscellaneous $17,000 $5,000 $2,000 $15,000 $25,000 $10,000 $16,073 $2,000 $1,800 $8,000 $10,000 Total Living Expenses $116,873 $4,200 Insurance Payments HO Insurance Principal Residence HO Insurance 2nd Home Auto Premiums Life Insurance #1 Life Insurance #3 $3,500 $2,100 $8,000 $1,000 Insurance Payments Total Cash Outflows Net Discretionary Cash Flows $18.800 $333,825 $1,175 1. Federal Income Taxes and Social Security are presumed to be discretionary as opposed to non-discretionary because loss is the greatest risk to the emergency fund and these expenses are not incurred in the event of a job loss 2. 3 The Social Security wage base is assumed to be $132,900. (5235,000 - $200,000) x 0.9% = $315 CASE 1 GEORGE AND LAURA FREEMAN CASE Today is January 1, 2020 INTRODUCTORY DATA The Family George Freeman (age 46) is the owner of a tool and die company, GMED Manufacturing Inc., (GMED) and is married to Laura Freeman (age 46) who is a self-employed graphic designer. They have four children: Jordan (age 7), Colin (age 5), Cate (age 3), and Caroline (age 1). George and Laura have been married for 11 years. George's salary is $235,000. Their net worth is approximately $1.9 million at this time; of which $1.0 million is the value of his business, GMED. Laura has an office, but primarily works from home so that she can also take care of the children. She has no employees and has Schedule C net income of $100,000 per year. Financial Goals & Concerns 1. They want to provide for their children's college education (4 years each) expected to cost $25,000 per year in today's dollars. 2. They want to save for weddings for each of their three daughters. They expect the weddings will cost $40,000 each in today's dollars and want to plan that each child will marry at age 23. They believe wedding costs are subject to general inflation 3. They want to retire debt free when they are age 62 (when they both plan to retire). 4. They initially define adequate retirement income as 80% of preretirement income. 5. They want to have adequate risk management coverage. 6. In case of his death, George is primarily concerned with providing income for Laura for the duration of her life and secondarily, leaving the remainder of his estate to their children. 7. George and Laura have mutually agreed to buy Colin a Porsche or give him the equivalent amount of money as they pay for the girls' weddings at his age 23. They have not yet told Colin. 8. They want to have an appropriate investment portfolio. 9. They want to have an appropriate estate plan. NTERNAL INFORMATION financial Statements fatement of Financial Position Assets Statement of Financial Position George and Laura Freeman Balance Sheet as of 1/1/2020 Liabilities and Net Worth Current Liabilities $25.000 W Credit Cards $5.000 $100,000 IT Mortgage. Principal Residence $13.722 $125.000 H Mortgage - 2nd Home $7.221 Total Current Liabilities Carrelsets Cash & Checking Torrent Assets 525943 estment Assets MED Manufacturing, Inc # Bokerage Account H Cash Value of Life Insurance 529 Savings Plans # 401(k) Plan Employee Deferral W Traditional IRA W Roth IRA Total investment Assets $25.000 $723,079 $93.628 Long-Term Liabilities W Credit Card IT Mortgage - Principal Residence H Mortgage - 2nd Home Total Long-Term Liabilities $1,000,000 $500,000 $60.000 $46,000 $50,000 $15.000 $20,000 $841,707 $1,691,000 Total Liabilities $867,650 Total Net Worth Personal Use Assets IT Principal Residence H 2nd Home IT Personal Property H Car #1 W Car # 2 H Snowmobiles Total Personal Use Assets Total Assets $600,000 $220,000 $100,000 $25,000 $35.000 $25,000 $1.953.350 $1,005,000 $2,821,000 Total Liabilities & Net Worth $2.821,000 1. Assets are stated at fair market value. 2. Liabilities are stated at principal only as of December 31, 2019 before January payments. 3. This is George's 100% interest and the value is based on his estimate. 4. These are for the children. George currently saves $6,000 per year into these accounts (see portfolio). 5. Land value is $50,000 Title Designations: HHusband (Sole Owner) W Wife (Sole Owner) IT-Joint Tenancy with Survivorship Rights tatement of Income and Expenses Statement of Income and Expenses George and Laura Freeman Statement of Income and Expenses Expected (Approximate) For This Year (2020) Totals $235,000 $100,000 Cash Inflows George's Salary Laura's Salary Total Cash Inflows $335,000 Cash Outflows Savings Brokerage Account 401(k) Plan- Employee Deferral 529 Savings Plans $6,500 $18,000 $6,000 Total Savings $30,500 Taxes" Federal Income Taxes Withheld George's Social Security Taxes Laura's Social Security Taxes George's Social Security - Additional 0.993 Property Tax Principal Residence Property Tax 2nd Home $51,025 $11,648 $14,130 $315 $8,000 $5,926 $91,044 $57,557 $14,051 $5,000 $76,608 $5,000 Total Taxes Debt Payments (Principal & Interest) Mortgage - Principal Residence Mortgage - 2nd Home Credit Cards Total Debt Payments Living Expenses Utilities Principal Residence Mountain Condo Expenses (net of rental income of $5,000) Gasoline for Autos Lawn Service Entertainment Vacations Church Donations Clothing Auto Maintenance Satellite TV Food Miscellaneous $17,000 $5,000 $2,000 $15,000 $25,000 $10,000 $16,073 $2,000 $1,800 $8,000 $10,000 Total Living Expenses $116,873 $4,200 Insurance Payments HO Insurance Principal Residence HO Insurance 2nd Home Auto Premiums Life Insurance #1 Life Insurance #3 $3,500 $2,100 $8,000 $1,000 Insurance Payments Total Cash Outflows Net Discretionary Cash Flows $18.800 $333,825 $1,175 1. Federal Income Taxes and Social Security are presumed to be discretionary as opposed to non-discretionary because loss is the greatest risk to the emergency fund and these expenses are not incurred in the event of a job loss 2. 3 The Social Security wage base is assumed to be $132,900. (5235,000 - $200,000) x 0.9% = $315