Grant P and Lisa R

Grant P. and Lisa R. Truman live with their family at the Moose Heaven Bed & Breakfast, which Grant operates. The Bed and Breakfast (B&B) is located atXXXXX Fort Collins, CO 80505. Grant’s Social Security number (SS#) is XXX-XX-XXXX and Lisa’s is XXX-XX-XXXX. Both are in their mid-40s and enjoy good health and eyesight. The Trumans have three daughters, Susie B. (SS# XXXXX), Samantha C. (SS# XXXXX), and Sarah D. (SS# XXXXX). Susie is 17 years old, Samantha is 12 years old, and Sarah is 10 years old. The Moose Heaven Bed & Breakfast is operated as a sole proprietorship and had the following income and expenses for the year: Room rental income $164,250 Vending machine income 2,325 Advertising expense 4,720 Depreciation 18,180 Mortgage interest on the B&B 32,940 Wages of maid 15,450 Taxes and licenses 6,420 Supplies 8,930 Business insurance 6,300 Laundry expenses 4,290 Accounting fees 1,850 Office expenses 2,380 Utilities 6,350 All of the above amounts relate to the business portion of the Bed & Breakfast; the personal portion is accounted for separately. The Moose Heaven Bed & Breakfast uses the cash method of accounting and has no inventory. The employer tax ID number is XXXXX The Trumans made estimated federal income tax payments of $16,000 and estimated state income tax payments of $6,000 (all made during 2011). Lisa is a substitute school teacher with the local school district. For the current year, Lisa’s Form W-2 from the school district showed the following: Wages $10,200 Federal income tax withheld 1,650 State income tax withheld 380 FICA (OASDI & Medicare) 780 Grant is retired from the U.S. army. His annual statement from the Army showed the following: Retirement income $9,400 Federal income tax withheld 1,200 State income tax withheld 290 Grant and Lisa paid (and can substantiate) the following amounts during the year: Grant is retired from the U.S. army. His annual statement from the Army showed the following: Grant and Lisa paid (and can substantiate) the following amounts during the year: Mastercard interest $1,480 Dental expenses 2,600 Colorado state income tax (for 2010) 450 Charitable contributions 1,875 Mortgage interest on home purchase (personal portion) 6,400 Real estate taxes (personal portion) 820 Life insurance premiums 845 Investment interest 4,300 Automobile registration fees (deductible portion) 450 Tax return preparation fee 475 Contributions to George Clinton’s reelection campaign 1,000 None of the investment interest is related to amounts borrowed to purchase the City of Atlanta tax exempt bonds. During the year, Grant and Lisa received the following qualifying dividends and interest: Interest: Verizon Bank $3,775 Brian’s Big Bank 360 Bank of Scotland 220 City of Atlanta Tax Exempt Bonds 1,490 Dividends: American Airlines 110 Heinz Foods 216 Also, Lisa owns Series EE U.S. savings bonds. During the year, the bond redemption value increased by $1,300. Lisa has not elected the accrual method for these bonds. There were no Scottish taxes paid on the interest from the Bank of Scotland. All the above stocks, bonds, and bank accounts are community property. Lisa has a stock portfolio. During the year she sold the following stock, none of which is qualified small business stock: Red Co. Brown Co. Purple Co. Sales Price $8,200 $12,100 $7,500 Basis 3,800 14,200 1,450 Date acquired 2/11/2003 3/27/2011 10/31/2003 Date sold 6/19/2011 9/18/2011 10/31/2011 Lisa paid her ex-husband $6,000 alimony in the current year, as required under the divorce decree.Her ex-husband’s name isXXXXX and his Social Security number is XXXXX Grant does all the significant work in the Bed & Breakfast and therefore he pays self-employment tax on 100 percent of the earnings from the B&B. During the year, Grant’s uncle Michael died. Michael had a $50,000 life insurance policy that named Grant as the beneficiary. Grant received the check for the benefits payable under the policy on November 30 of the current year. Michael also left Grant a small nonoperating farm with an appraised value of $120,000. Two years ago, Samantha won a contest and received a cash prize. The money is in a savings account in Samantha’s name. Her interest on the savings account in the current year is $3,400. Instead of having Samantha fill out a tax return and pay the “kiddie tax,” Grant and Lisa elect to report the interest income on their joint tax return. Required: The following is a list of the forms and schedules that you might need to complete the tax return: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule SE, and Form 8814.