Question

Russell (age 50) and Linda (age 45) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landscapes Unlimited. The business is operated out of their home, located at 1234 Katy Rd., Katy, TX 77493. Russell Long had the following income and expenses from the landscaping business:
Income............... $132,400
` Expenses:
Business insurance............ 3,800
Office supplies............ 2,600
Payroll................ 83,000
Payroll taxes............. 8,100
Meals and entertainment......... 2,350
Contract labor............ 7,290
Maintenance............. 8,300
Equipment rent............ 12,300
Telephone.............. 2,300
Business gifts (no gift over $22)...... 770
Special clothing and safety shoes..... 600
Subscription to Green Lawns magazine.... 120
Educational seminar on bug control.... 350
Other expenses............ 1,830
The business uses the cash method of accounting and has no accounts receivable or inventory held for resale.
In addition to the above expenses, the Longs have set aside one room of their house as a home office. The room is 150 square feet and their house has a total of 1,500 square feet. They pay $12,000 per year rental on their house, and the utilities amount to $3,000 for the year.
The Longs also have the following interest income for the year:
Interest from Morgan Bank bond portfolio $42,520
The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively, so they do not qualify for the child credit. Russell’s Social Security number is 664-98-5678 and Linda’s is 554-98-3946. They made an estimated tax payment to the
IRS of $4,500 on April 15, 2014.
Required:
Complete the Longs’ federal tax return for 2014. Use Form 1040, Schedule B, Schedule C, and Form 8829, on Pages 3-57 to 3-63, and any other appropriate schedule(s) to complete this tax return. Do not complete Form 4562 (depreciation). Make realistic assumptions about any missing data.


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  • CreatedJuly 16, 2015
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