Dr. Carol Harris, CPA, is a single taxpayer and she lives at 674 Yankee Street, Durham, NC 27409. Her Social Security number is 793-52-4335. Carol is an Associate Professor of Accounting at a local college. Carol’s earnings and withholding from the college for 2014 are: 

Earnings……………………………. $54,000

Federal income tax withheld……….   8,800

State income tax withheld…………..  2,500

FICA tax of $3,348 and Medicare tax of $783 were also withheld from Carol’s earnings. Carol’s other income includes interest of $145 from a savings account at New England Bank and $450 of qualified dividends from Microsoft.

During the year, Carol paid the following amounts (all of which can be substantiated): 

Home mortgage interest…………………………       $6,300

Visa card interest………………………………..       350

Auto insurance…………………………………..       750

Property taxes on personal residence…………….      2,650

Other medical expenses…………………………..     810

Charitable contributions (in cash)…………………    1,000

Carol had the following stock market transactions, all of which were reported on Form 1099-B, along with the basis of the stock sold:

In addition to being a professor at the local college, Carol maintains a CPA practice. Income and expenses from this activity are:

Fees from CPA practice (all paid by check)………………………    $38,800

Office rent…………………………………………………………   3,600

Supplies……………………………………………………………    750

Computer tax service………………………………………………   1,200

Mileage (4,107 miles)………………………………………………  2,300

Client meals and entertainment…………………………………….   2,740

Telephone……………………………………………………………  975

Other expenses……………………………………………………….   1,400

Carol drove her car (placed in service on January 1, 2012) 20,000 miles in total, of which 5,000 miles were for commuting. Carol made 2014 estimated tax payments to the U.S. Treasury of $3,000 for each quarter.

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Stock cuired Sold Price Basis Trout Co. 04/05/04 10/15/14 $6,000 Bass Co. Shark Co. 09/12/05 0/15/14 $7,000 $3,600 $5,500 $8,500 02/01/14 08/03/14 $7,000