Required: Complete the tax return on form 540, Schedule CA (540), and form 3506. Bea and Bill Morris live at 456 So. Sherman St., Placerville, CA 95667. They have one dependent child, Barbara, age 2, and Bill's parents Maggie and Mel Morris also live with them. Maggie's income was $3,054 and Mel's income was $3,066, and their combined income was less than half the cost of their support. The Morris' federal adjusted gross income was $107,460. Included in that amount, are wages of $61,000 and $48,485, California income tax refund of $320, interest on a U.S. series HH bond of $165, capital gains of $2,090, and California lottery winnings of $400. They did not include interest income on City of Sacramento bonds of $625. They also had an IRA deduction of $5,000. See the attached copy of the Morris' Form 1040, page 1. Their federal itemized deductions included $11,350 for home mortgage interest, $3,200 for California income tax, $352 for State Disability Insurance, $82 for foreign income tax, $2,890 real estate/property tax, $490 personal property tax on value of automobiles, $80 in gambling losses (California lottery), and $1,620 in charitable contributions. See the attached copy of the Morris' Schedule A. The Social Security numbers are: Bea 111-22-3333; Bill 222-33-4444; Barbara 333-445555; Maggie 444- 55-6666; and Mel 555-66-7777