Write a paper on tax return problem

Facts:1. Phillip and Claire are married and file a joint return. Phillip is self-employed as a realestate agent, and Claire is a flight attendant. Phillip and Claire have three dependentchildren. All three children live at home with Phillip and Claire for the entire year.The Dunphys provide you with the following additional information:• The Dunphys do not want to contribute to the presidential election campaign.• The Dunphys live at 3701 Brighton Avenue, Los Angeles, California 90018.• Phillip’s birthday is 11/5/1973 and his Social Security number is 321-XX-5766.• Claire’s birthday is 5/12/1976 and her Social Security number is 567-XX-1258.• Haley’s birthday is 11/6/2007 and her Social Security number is 621-XX-7592.• Alex’s birthday is 2/1/2009 and her Social Security number is 621-XX-8751.• Luke’s birthday is 12/12/2013 and his Social Security number is 621-XX-9926.• The Dunphys do not have any foreign bank accounts or trusts.2. Claire is a flight attendant for Western American Airlines (WAA), where she earned$57,000 in salary. WAA withheld federal income tax of $6,375, state income tax of$1,800, Los Angeles city income tax of $675, Social Security tax of $3,600, andMedicare tax of $825.3. Phillip and Claire received $300 of interest from State Savings Bank on a joint account.They also received a qualified dividend of $395 on jointly owned stock in XilaCorporation.Page C-74. Phillip’s full-time real estate business is named “Phillip Dunphy Realty.” His business islocated at 645 Grove Street, Los Angeles, California 90018, and his employeridentification number is 93-3488888. Phillip’s gross receipts during the year were$730,000. Phillip uses the cash method of accounting for his business. Phillip’s businessexpenses are as follows:Advertising $ 5,000Professional dues 800Professional journals 200Employee wages 48,000Insurance on office contents 1,120Accounting services 2,100Miscellaneous office expense 500Utilities and telephone 3,360Payroll taxes 3,600Depreciation To be calculated5. On March 20, Phillip moved his business out of the old offices at 1103 Allium Lane intoa newly constructed and equipped office on Grove Street. Phillip sold the old officebuilding and all its furnishings. Phillip’s expenditures for the new office building are asfollows:Date Acquired Asset Cost3/20 Land $ 300,0003/20 Office building 2,500,0003/20 Furniture 200,0004/1 Computer system 350,0006/1 Artwork 150,0006. Phillip computes his cost recovery allowance using MACRS. He would like to use the§179 immediate expensing, but he has elected to not claim any bonus depreciation.Phillip has never claimed §179 or bonus depreciation before. The assets Phillip sold onMarch 20 are as follows:DateAcquired Asset SalesPriceOriginalCostAccumulated Depreciation as ofBeginning of the Year5/1/13 Officebuilding$940,000 $900,000 $129,8255/1/13 Land 150,000 100,000 07/1/13 Furniture 50,000 239,000 206,9988/13/15 Furniture 10,000 324,000 222,7824/12/16 Officeequipment100,000 120,000 67,5245/13/18 Computers 30,000 50,000 10,0007. Phillip has never sold any assets relating to his business before this transaction.8. The Dunphys sold 60 shares of Fizbo Corporation common stock on September 3 for $65a share (minus a $50 total commission). The Dunphys purchased the stock on November8, 2018, for $90 a share. They also sold a painting for $13,000 on March 1. Clairepurchased the painting for $20,050 on September 1, 2012, as an investment.9. The Dunphys filed their 2018 federal, state, and local returns on April 13, 2019. Theypaid the following additional 2018 taxes with their returns: federal income taxes of $630,state income taxes of $250, and city income taxes of $75.Page C-810. The Dunphys made timely estimated federal income tax payments of $10,000 eachquarter during 2019. They also made estimated state income tax payments of $1,000 eachquarter and estimated city income tax payments of $300 each quarter. The Dunphys madeall fourth-quarter payments on December 31, 2019. They would like to receive a refundfor any overpayments.11. Phillip and Claire have qualifying insurance for purposes of the Affordable Care Act(ACA).