Federal Tax Return Scenario: Donald and Dianne Duncan

Comprehensive Module 4: Final Exam Scenario Complete a federal tax return for Donald and Dianne Duncan. Donald T. (age 48, DOB: 3/8/1974, SSN: 306-00-1010) and Dianne W. (age 43, DOB: 2/15/1979, SSN: 306-00-1212) are married and have lived together at 910 Riverline Drive, Your City, Your State - Your Zip for several years. Donald is a printer at the Post Tribune, and Dianne operates a daycare business from home. Their 1099s and W-2s follow. Donald does not want to designate $3 of his taxes for the Presidential Campaign Fund, and neither does Dianne. They will file a joint return for the 2021 tax year. Donald and Dianne did not itemize in tax year 2020. They were covered by health insurance for the entire year. Donald and Dianne made a $400 cash contribution to United Way. They received a $1,400 EIP3 payment. Dianne started her daycare business on January 1, 2020; it is open five days a week from 8:30 AM to 5:30 PM all year. (Use 260 days for the year.) Dianne was required to purchase an additional homeowner's insurance rider, to cover the operation of a business in the home. She uses the cash method of accounting. Their home is valued at $270,200, which includes the land value of $20,000. The total area of the house is 2,000 square feet, and she uses the whole house for the daycare. Gross receipts for daycare business: $13,600 Expenses: Donald owns a residential rental property located at 1602 Gaskin Road, Your City, Your State - Your Zip, which he purchased and placed in service on May 5, 2020. The cost of the property was $150,000, of which $30,000 was for the land. The total rental income was $12,600. The house was rented on May 5thand the tenant has remained in the home since that date. The rent was sent directly to Donald, as were any tenant requests for repairs. Donald does not meet the rental real estate safe harbor requirements for purposes of the QBI deduction. Expenses for the rental property include: Mortgage interest $5,525 Real estate taxes $1,520 Homeowners insurance $547 Repairs of roof $780