Gregory and lulu clifden tax problem

Assignment Help Taxation

Reference no: EM13544568

Gregory and Lulu Clifden's Tax Return

Gregory R. and Lulu B. Clifden live with their family at the Rock Glen House Bed & Breakfast, which Gregory operates. The Bed & Breakfast (B&B) is located at 33333 Fume Blanc Way, Temecula, CA 92591. Gregory's Social Security number is 543-88-9756 and Lulu's is 256-43-8819. Both are in their mid-40s and enjoy good health and eyesight.

1. The Clifdens have three sons, Gerald A. (SS# 466-74-1131), Gary T. (SS# 465-768375), and Glenn E. (SS# 475-23-1426). Gerald is 17 years old, Gary is 12 years old, and Glenn is 10 years old.

2. The Rock Glen House Bed & Breakfast is operated as a sole proprietorship and had the following income and expenses for the year:


Room rental income	$164,250
Vending machine income	2,325
Advertising expense	4,720
Depreciation	18,180
Mortgage interest on the B&B	32,940
Wages of maid	15,450
Taxes and licenses	6,420
Supplies	8,930
Business insurance	6,300
Laundry expenses	4,290
Accounting fees	1,850
Office expenses	2,380
Utilities	6,350

All of the above amounts relate to the business portion of the Bed & Breakfast; the personal portion is accounted for separately. The Rock Glen House Bed & Breakfast uses the cash method of accounting and has no inventory. The employer tax ID number is 95-1234567.

3. The Clifdens made estimated federal income tax payments of $16,000 and estimated state income tax payments of $6,000 (all made during 2014).

4. Lulu is a substitute schoolteacher with the local school district. For the current year, Lulu's Form W-2 from the school district showed the following:

Wages	$10,200
Federal income tax withheld	1,650
State income tax withheld	380
FICA (OASDI & Medicare)	780

5. Gregory is retired from the U.S. Navy. His annual statement from the Navy, Form 1099-R, is on Page D-9.

Reference no: EM13544568

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