Posted: December 6th, 2022

 Joan’s birthday is 2/1/1999 and SSN 575-92-4321
 Jessica’s birthday is 12/12/2003 and SSN 613-97-8465
Vince lives at home and attends law school full-time at the University of
Cincinnati.
Joan is a full-time student at Edgecliff College in Cincinnati. Bob and
Jennifer provided over half of her support for the year. Joan worked part-
time as an independent contractor during the year, earning $4,900. Joan
lived at home until she was married in December of 2020. She filed a joint
2020 return with her husband, Patrick, who earned $40,000 during the
year.
Jessica is the youngest and lived in the Smith’s home for the entire year.
1

The Smiths provide you with the following additional information:
 Jennifer is a lecturer at Xavier University in Cincinnati, where she earned
$30,000. Jennifer received a W2 from the university that showed: gross
wages of $30,000, FICA/MDCR wages of $30,000, withheld federal
income tax of $3,375, state income tax of $900, Cincinnati city income tax
of $375, $1,860 of SS tax and $435 of Medicare tax. The University’s
employer id number (FEIN) is 99-1234567 and its address is 1000
University Avenue, Cincinnati, OH 45201. Their Ohio ID number is 1214.
She also worked part of the year for Delta Airlines. Delta gave her a W2
that showed $10,000 in gross, social security and Medicare wages, and
withheld federal income tax of $1,125, state income tax of $300, Cincinnati
city income tax of $125, $620 for SS tax, and $145 for Medicare tax.
Delta’s employer identification number (FEIN) is 88-5588991 and its
address is 555 Frequent Flyer Way, Cincinnati, OH 45201. Their Ohio ID
number is 1313.
 The Smiths received $800 of interest income from State Savings Bank on
a joint savings account. This was reported to them on a 1099-INT. You
may ignore the FEIN and address of the bank.
 They also received municipal bond interest of $1,000 on City of Cincinnati
bonds. While this income is not taxable, it must be reported on the return.
You may ignore the FEIN and address of the city.
 Bob received a dividend of $540 on General Bicycle Corporation stock he
owns. Jennifer received a dividend of $390 on Acme Clothing Corporation
stock she owns. Bob and Jennifer received a dividend of $866 on jointly
owned stock in Maple Company. All the dividends received in 2021 are
qualifying dividends (they must be entered into the tax software as both
ordinary and qualified or they will not be recorded.) You may ignore the
FEIN and address of the companies that paid the dividends.
Regarding Bob’s dental practice (Schedule C):
 Bob practices under the name “Robert G. Smith, DDS.” His business is
located at 645 West Avenue, Cincinnati, OH 45211, and his employer
identification number is 01-2222222. He uses the cash method of
accounting; he materially participates in the business and he did not make
any payments that require 1099s to be filed. NOTE: For the “type of
business” choose “Offices of Dentists”. You should then be able to find the
applicable business code from the drop-down menu.
2

 Bob’s gross receipts during the year were $111,000.
 Bob’s business expenses are as follows:
a. Advertising $1,300
b. Professional dues 490
c. Professional journals 360
d. Contributions to employee benefit plans 2,000
e. Malpractice insurance 5,400
f. Fine for overbilling State of Ohio for
work performed on welfare patient 5,000
g. Insurance on office contents 720
h. Interest on money borrowed to
refurbish office 600
i. Accounting services 2,100
j. Miscellaneous office expense 388
k. Office rent 12,000
l. Dental supplies 7,672
m. Utilities and telephone 3,360
n. Wages 30,000
o. Payroll taxes 2,400
 In June of 2021, Bob decided to refurbish his office. This project
was completed, and the assets placed in service on July 1. Bob’s
expenditures included $8,500 for new office furniture (seven year
recovery period), $6,200 for new dental equipment (seven-year
recovery period), and $2,500 for a new computer (five year
recovery period). Bob did not elect to use Section 179 immediate
expensing and did not claim any bonus depreciation.
Rental Income:
 The Smiths jointly own rental property that they sold in 2021. They did not
make any payments that required them to file a 1099. The property is a
Single-Family Residence and the address of the property is 325 Oak
Street, Cincinnati, OH 45211. They did not use it for personal use in
2021. Their original cost basis in the residence is $155,000, 10% of which
was determined to be the value of the land. Enter the house and the land
as two separate assets. They originally placed it in service on January 1,
2014. The accumulated depreciation on the rental house through
December 31, 2020 is $35,509. Bob and Jennifer sold the house on June
30, 2021. They received $325,000 for the house (allocate 10% to the
land) less a 6 percent commission charged by the broker (which can all be
allocated to the house.
3The Joneses collected rent of $1,000 a month during the six months the

house was occupied during the year. Along with six months of
depreciation, they incurred the following related expenses during this
period:
Property insurance $500
Property taxes 800
Maintenance 465
Other Income and Expenses:
 The Smiths sold 200 shares of Capp Corporation stock on September 3,
2021, for $42 a share. They originally purchased the stock for $10 per
share on 01/01/1978. Enter this information on a Form 1099-B. Ignore
broker’s fees.
 Bob and Jennifer have given you a file containing the following receipts for
expenditures during the year:
Medical expenses (doctor/dentist/hospitals)
(after insurance reimbursement) 6,320
Real estate taxes on personal residence 4,762
Interest on home mortgage (paid to Home State
Savings & Loan) 8,250
Cash contribution to St. Matthew’s church 13,080
 The Smiths made four timely paid estimated federal income tax payments
of $1,500 each quarter during 2021.
Prepare Bob and Jennifer’s 2021 Form 1040, including all required
schedules, forms, and attachments. No state or city tax returns need to
be prepared

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