Reference no: EM131205529
Tax Return Problem Brian and Corinne Lee are married taxpayers, filing jointly. They live in the home they own located at 3301 Pacific Coast Hwy, Laguna Beach, CA 92701. Brian is an optometrist who owns his own business and Corinne is a social worker for the County of Orange. They have two sons, Brady and Hank. During a 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 SSN’s of the four current members of their household are: Brian 010-11-8585; Corinne 200-44-0990; Brady 602-33-7845; Hank 602-98-0110. Their birth days are as follows: Brian, 5/20/1975, Corrine, 7/23/1975, Brady,9/1/1975; and Hank, 9/11/2008. The following are Brian’s income and expense information from his business and Corinne’s W-2 from the county for 2014: Lee’s Optometrist Office Income and Expense for 2014 Gross Income $265,000 Cost of Goods Sold 88,000 (beginning inventory $45,000; purchases $63,000; ending inventory $20,000) Advertising 5,000 Wages 32,000 Office rent 9,600 Other 2,100 Lee also made $18,000 in federal estimated tax payments during the year. The Form W-2 Corrine received from the County of Orange contained this information in the following boxes: Wages (Box 1) = $76,925.04 Federal W/H (Box 2) = $12,085.90 Social Security Wages (Box 3) = $76,925.04 Social Security W/H (Box 4) = $ 5,689.99 Medicare Wages (Box 5) = $76,925.04 Medicare W/H (Box 6) = $ 2,889.50 In addition, the Lee’s had the following income and expenses: Income Interest from CD’s at Pacific Coast Bank $2,000 Dividends from Lee’s Chinese investment (foreign income) 9,000 Expenses Mortgage interest paid to PC Bank for their home $26,500 Property taxes paid on their residence 10,000 Foreign taxes paid to the Chinese government 1,980 Adoption expense (fees, court costs and attorney’s fees) 8,850 Childcare costs at LB Parks and Recreations after school program for Hank 3,500 Installed 3 ceiling fans during the year ($225 each) 675 Installed solar panel heaters for their pool 4,300 Prepare the Lee’s federal tax return for 2014. Use Form 1040, Schedule A, Schedule B, Schedule C and any appropriate schedules or forms they may need for credits. Do not complete Form 4562 (with the Schedule C). For any missing information, make reasonable assumptions. ---- Insert Form 1040, Sched A, Sched B, Sched C, Form 1116 here ------
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: Tax Return Problem Brian and Corinne Lee are married taxpayers, filing jointly. They live in the home they own located at 3301 Pacific Coast Hwy, Laguna Beach, CA 92701. Brian is an optometrist who owns his own business and Corinne is a social worker..
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