Jeff (60) and Cherie (59) Smith live in Georgia. Jeff has a small business in addition to

Fantastic news! We've Found the answer you've been seeking!

Question:

Jeff (60) and Cherie (59) Smith live in Georgia. Jeff has a small business in addition to other investments Jeff's's business in which he devotes much of his time is an online health and wellness coaching website, including personal trainers, nutrition, and overall wellness coaching. Cherie has a passion for politics and is an outspoken activist. Jeff and Cherie donate regularly to political causes , but Cherie has not run for political office. They have four grown children. Jeff had income from his business of $ 410,000. It is all self- employment income. The business is structured as an LLC, so this is Jeff's distributive income from the business after all benefits had been paid out to the employees . He employs three employees, most of which are family members. He paid $ 350,000 in W-2 wages to his employees . Jeff contributed the maximum possible to his SEP IRA. Cherie works as a public relations officer for a startup corporation, largely because of her political connections , but she is not a lobbyist . She is an employee at the company and has gross pay of $ 60,000. She contributed the maximum allowed amount to her 401(k) plan for the tax year . As part of her job , she received Incentive Stock Options. During the tax year she exercised 1,000 options with a strike price of $20 per share when the stock was trading at $30 per share. She has not sold the stock. Additionally , Jeff and Cherie live in a nice house. Jeff believes in being as leveraged as possible so that he can put more money into his business development ventures . He has a mortgage of 1.2 million dollars on his primary residence that they acquired in the Summer of 2022. His mortgage currently has an interest rate of 4.5% and he paid $ 55,000 in interest during the tax year. Property taxes were $ 30,000 and state income taxes paid were $ 35,000 . Jeff has private health insurance for which he pays $18,000 per year. He also owns land for investment purposes . The land has a loan against it for $380,000 . Jeff's basis in the land is $ 300,000. He paid $ 25,000 in interest on the loan during the tax year and property taxes of $6,000 on the land. He also rented out the land for a large Boy Scout Jamboree during the year. Rent from the Jamboree was $4,000 . During the tax year Jeff and Cherie gave $50,000 to their church and also gave $ 20,000 to political candidates . Jeff had also made a loan to his brother who wanted to start a dental practice in Utah. The loan was for $ 175,000 at 5 % over 10 years. Jeff's brother had made the first 30 payments , but was not successful with the dental practice in Utah ( Utah has the highest per capita number of dentists in the country ). His brother has since moved to Alaska , where dentists are paid better and is working to get caught up on his student loans . Jeff's brother lost his house in Utah to foreclosure and also lost the business (filed bankruptcy , but did not include Jeff's loan in the bankruptcy filing ). Jeff has discussed the debt with his brother , but knows that he cannot pay back the debt. He is uncertain how to handle this. In the current tax year, Jeff's brother made one payment before filing for bankruptcy (30th payment) and moving to Alaska. Cherie and their daughter volunteer at the children's hospital. This year Cherie purchased a therapy dog to work with the children when they volunteer. The dog cost $20,000. Cherie owns the dog, but they take the dog to the hospital each time they go. They have also been invited to come with their dog to domestic abuse shelters to play with the children. They make two visits per week. They have good records of their visits, mileage logs (a total of 5,623 miles). Costs associated with the dog training, food , and upkeep are $3,500 for the year. They are wondering if they can deduct the cost of the dog for charitable purposes. Depending on your answer, they are wondering if there are any other options to deduct the cost of the dog.

Using this information, please calculate Jeff and Cherie's tax liability for the year and advise him on any uncertain matters. While the focus of this project is the tax calculation, it is important that you consider some ways that Jeff can improve his situation in future years.