Yvonne Bradley lives at 1310 Meadow Lane, Farmingdale, NY 11735, and her Social Security number is 123-45-6777. Yvonne is single and has a 20-year-old son, Sean. His Social Security number is 111-11-1112. Sean lives with Yvonne, and she fully supports him. Sean spent 2020 traveling in Europe and was not a college student. He had gross income of $4,655 in 2020. Sean paid $4,000 of lodging expenses that Yvonne reimbursed after they were fully documented. Yvonne paid the $4,000 to Sean using a check from her sole proprietorship. That amount is not included in the items listed below. Yvonne had substantial health problems during 2020, and many of her expenses were not reimbursed by her health insurance.
Yvonne owns Bradley Enterprises, LLC (98-7654321), a data processing service that she operates as a sole proprietorship. Her business is located at 456 Hill Street, Farmingdale, NY 11735. The business activity code is 514210. Accounting Method is â€œCash Basis.â€ Her 2020 Form 1040, Schedule C for Bradley Enterprises shows revenues of $315,000, office expenses of $66,759, employee salary of $63,000, employee payroll taxes (category: â€œTaxes/Licenses Expensesâ€)of $4,820, business meal expenses (before the 50% reduction) of $22,000, and rent expense of $34,000. The rent expense includes payments related to renting an office ($30,000) and payments related to renting various equipment ($4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Yvonne personally purchases health insurance on herself and Sean. The premiums are $23,000 per year.
Yvonne has an extensive stock portfolio and has prepared the following analysis:
Stock Number of Shares Date Purchased Date Sold Per-Share Cost Per-Share Selling Price Total Dividends
Beige 10 10/18/19 10/11/20 $80 $74 $30
Garland 30 10/11/13 10/11/20 43 157 70
Peach 15 3/10/20 8/11/20 62 33 45
Note: Yvonne received a Form 1099-B from her stockbroker that included the adjusted basis and sales proceeds for each of her stock transactions. The per-share cost includes commissions, and the per-share selling price is net of commissions. Also, the dividends are the actual dividends received in 2020, and these are both ordinary dividends and qualified dividends. ALL TRANSACTIONS ARE CONSIDERED â€œCOVERED.â€
Yvonne had $800 of interest income from State of NY bonds and $600 of interest income on her Farmingdale Savings Bank account. She paid $25,000 of alimony to her former husband, John Bradley. His Social Security number is 123-45-6788. They divorced on Jan. 2, 2017
Yvonne itemizes her deductions and provides the following information, which may be relevant to her return:
Item Amount Comment
Unreimbursed medical expenses for Yvonne $ 9,748 Does not include health insurance premiums.
NY State income taxes paid 1,830
Real property taxes on personal residence 3,230
Interest paid on home mortgage (Form 1098) 8,137 The loan is secured by the residence and was incurred when the home was purchased in 2005.The mortgage is with Wells Fargo, outstanding principal is $200,000.
Charitable contributions 1,399 $940 cash payments to Yvonneâ€™s church and $459 cash payments made to homeless persons for whom she felt sorry. She can document all the expenditures.
Sales taxes 619 Amount per sales tax table.
Yvonne made $27,000 estimated Federal income tax payments, does not want any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2021 taxes. Ashley received the appropriate coronavirus recovery rebates (economic impact payments.) Any follow-up questions in your tax software program should be ignored
Yvonne qualifies for the Â§ 199A deduction for qualified business income. Be sure to include that in your calculations.
Compute Yvonneâ€™s net tax payable or refund due for 2020.
INSTRUCTIONS: Prepare the 2020 Federal income tax return. You will need Form 1040 and its Schedules 1, 2, 3, A, B, C, D, and SE and Forms 8949 and 8995. You must submit all forms and schedules as PDF files, using the Dropbox in BB. You may use tax software such as ProConnect or TurboTax, or manually prepare the tax returns.