Question

Tony and Jeannie Nelson are married and file a joint return. They have four children whose ages are: 12,15,19 & 23. The three youngest live at home with their parents and qualify as their dependents. The oldest Roger got married on 5/5 2019 and lives with his wife, Jane. The 19-year old Tabitha is studying Fine Arts at Savannah College of Art & Design. During the summer she helps her mother put together the art exhibits. They provide you with the following information regarding their 2019 upcoming tax return: 1) Tony Nelson is an aerospace engineer he runs an engineering firm, Nelson Engineering (NE), as a sole proprietorship since 2010. a) NE has very lucrative contracts with numerous aerospace companies and during 2019 it earned $702,000. b) NE rents an office downtown where they meet with clients and conducts business. The rent includes all utilities. NE paid $38,000 in rent expense in 2019. In December 2019 the landlord offered to maintain the same yearly rent cost and Tony could receive an additional month's rent for free if he prepaid his 2020 year rent in advance. Tony agreed and paid an additional $38,000 on December 1, 2019 to cover January 2020 through January 2021 rent. c) NE obtained a business loan from SunTrust Bank and paid $2,400 in prepaid interest for June 1, 2019 through May 30, 2020. d) NE has a few employees, including an electrical engineer, a part-time engineering intern and an office manager. The combined wages for these employees is $196,000. Payroll taxes including for these employees is $15,000. e) Tony took different business clients to see several home Miami Heat games followed by dinners at nearby restaurants where business was discussed. The meals were not considered lavish. The total cost for the Heat tickets and accompanying meals were $1,200 and $800, respectively. f) In March 2019, Tony flew to a two-day engineering convention held in Phoenix, AZ requiring a two-night hotel stay. While there, Tony noted that the convention dress code was formal when he thought it would be casual. Tony immediately purchased a business suit for $300 (not considered lavish) at a nearby department store. All food costs were covered by the convention organizers. Other trip costs that Tony paid were airplane ticket $400 and hotel lodgings cost $200/night. g) The depreciation for the year on the fixed assets owned by NE are estimated to total $3,400. h) All of NE's business transactions are properly documented and supported by receipts/invoices. In addition to deductible portion of the items listed above the business will have an additional $4,400 of deductible other expenses. 2) Jeannie Nelson is an artist; she works part-time teaching art 2 days a week at a magnet art school in their town. She earned $10,000 in salary from Cocoa Beach, School of the Arts, the following items were withheld from her gross wages, $1,000 federal income taxes, $100 state income tax, $620 social security and $145 Medicare. She is not covered under their insurance plan as she only works 15 hours a week. She also volunteers 5 hours a week with the Girl Scouts of America as an art instructor.

Answer 1

Unable to upload Excel so providing you with the Images.

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mount Amount Explanantion $ 29,800.00 17200 in May and 12600 in August $ 9,750.00 375 Per painting, Total i.e. 375*26(16 in May and 10 in August) $ 20,050.00 Tony & Jeannie Nelson Jeannie's Abstract 2019 Item Description Revenue Cost of Goods Sold Gross Profit Business Expenses Depreciation $ 3,500.00 Taxes $ 1,900.00 Utilities 2,400.00 Other Expenses $ - Total Expenses Net Business Taxable income (Loss) As provided in Question As provided in Question As provided in Question $ $ 7,800.00 12,250.00 Self Employment Tax deduction

Tony & Jeannie Nelson Sale of Assets 2019 Short Term Long Term Capital Gain (Loss) Net Gain Capital Gain Items Proceeds Cost (Loss) (Loss) 28% 25% 0/15/20 a Comon Stock York Co. $ 20,400.00 $ 12,000.00 $ 8.400.00 $ 8,400.00 b Comon Stock New Co. $ 21,000.00 $ 15,750.00 $ 5,250.00 $ 5,250.00 c Comon Stock City Co. $ 12,000.00 $ 13,250.00 $ 1,250.00 5 -1,250.00 d Antique Coins $ 27,000.00 $ 25,500.00 $ 1,500.00 $ 1.500.00 e Land $ 15,000.00 $ 12,000.00 $ 33,000.00 $ 3.000.00 $ 30,000.00 f Stock in Space Explorers 5 32,000.00 $ 28,000.00 $ 4,000.00 $ 4,000.00 & Carry Over $ -12,000.00 Total Gain Loss $ 38,900.00 $ -1,250.00 $ 1.500.00 5 3,000.00 $ 47,650.00 Netting Steps Carry Cver $ -3,000.00 Net Gain (Loss) S -1,250.00 $ 4,500.00 5 3,000.00 $ 47,650.00 Explanation Held for More than 1 Year i.e from 2/14/2011 to 4/4/2019 Held for More than 1 Year Held for less than 1 Year Antiques are taxed at special rate of 28% and FMV to be taken as Cost Recaptured Gain - Net Gain-Unrecaptured Gain, i.e., 33000 - 30000 Held for More than 1 Year Only $3000 can be utilized in one year