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TAX FORM$/$RETURN PREPARATION PROBLEMS

Dave Stevens, age $34,$ is a self$-$employed physical therapist. His wife Sarah, age $31,$ teaches

English as a Second Language at a local language school. Dave's Social Security number is

$111-11-1111.$ Sarah's Social Security number is $222-22-2222.$ Sarah and Dave have three

children$-$Andrew, age $8$; Isaac, age $6$; and Mira, age $3.$ The children's Social Security num$-$

bers are, respectively, $333-33-3333,444-44-4444,$ and $555-55-5555.$ They live at $12637$

Pheasant Run, West Bend, Oregon $74658.$ They paid $$8,900$ in qualified residence interest

and $$2,400$ in property taxes on their home. They had cash charitable contributions of

$$14,000.$ They also paid $$180$ to a CPA for preparing their federal and state income tax

returns for the prior year, $$100$ of which was for the preparation of Dave's Schedule C$.$

Sarah and Dave earned interest on CDs of $$3,200.$ Sarah's salary for the year is $$32,000,$

from which $$9,600$ in federal income tax and $$1,400$ in state income tax were withheld.

Dave's office is located at Suite $402,942$ Woodview Drive, Portland, Oregon $74624,$ and his

employer ID number is $11-1111111.$ Dave has been practicing for four years, and he uses

the cash method of accounting. During $2019,$ Dave recorded the following items of income:

Revenue from patient visits $$300,000$

Interest earned $on$ the office $225$

checking balance

The following expenses were recorded for the office:

Dave pays $$50$ annually for use of a safety deposit box to store certain confidential docu$-$

ments related to his business. In addition to his medical practice, Dave spends $15$ hours

every week managing his real estate investments. To make sure he is aware of all current

investment strategies and best practices, he subscribes to the following journals:

Dave also prepaid $$33,000$ in estimated federal income taxes. Prepare Dave and Sarah's

$2019$ tax return $($Form $1040,$ Schedules $1,2,3,$ A$,$ B$,$ C$,$ SE$,$ and Form $8995).$ Disregard

any tax credits for which they may be eligible.

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