Kelly and Chanelle Chambers, ages 47 and.45, are married and live at 584 Thoreau Drive, Boston, MA 59483. Kelly's Social Secuiity number is 254.91.9483 and Chanelle's is,374-48-2938. The Chamber's have two children: Emma age23, and Chet, age 19.
Their Social Security numbers are 385-64-8496 and 385-68-9462, respectively. Emria is a single college-student-and'earned $8,000 during rhe summer. Kelly and Chanelle help Emma through school by paying for her room, board, and tuition. Emma lives at home during the summer. Chet has a physical handicap and lives at home. He attends a local university and earned $4,000 working for a marketing firm. In sum, Kelly and Chanelle provide rnore than Sao/" of. both Emma's and chet's toial support for the year.
Kelly is a commercial pilot for a small airline. His salary is $95,000, from which . $19,000 of federal income tax and $8,000 of state income tax were withheld. Kelly also pays premiums for health, disability and life insurance. $2,000 of the premium was for
health insurance, $250 for disability and $400 for life insurance.
Chanelle owns Alliance Networks, a proprietorship that does network consulting.
During the year, Chanelle's gross revenues were $23,000. She incurred the following
expenses in her business:
- Liability insurance $ 700
- Software rental 5,400
- Journals and magazines 150
- Training seminars 1,200
- Supplies 1,300
- Donations to a political campaign fund 800
Kelly enjoys playing guitar and plays in a band. Kelly's band has developed a local following.
This year, his gross revenues were $1,200 for playing shows attd $700 on CD
sales. He incurred the following expenses:
- Studio rent expense $ 1,300
- Sound system repairs 200
- CD production 500
- New guitar and amplifier 800
Kelly's father passed away during the year. Kelly and Chanelle received $100,000 from. The life insurance policy. Neither Kelly nor Chanelle paid any of the premiums. chanelle purchased 100 shares of Thurston co.-stock on May 1,1991, for $1,000.
Thurston Co. was declared bankrupt during rhe current year.
Chet's physician recommended that he see a physical therapist to help with his disabilii!y. |:lty paid the therapist $7,000 during the year.because his insurance would not cover the bills.
Kelly and Chanelle-went to Las Vegas and won $5,000 at the blackjack table. The next night, they lost $6,000.
Kelly and Chanelle glyq $900 to their church and, during rhe year, they had the following other income and expenses:
- Real estate taxes
- $1,400
- Property taxes on car (determined by value) 500
- Home mortgage interest 9,000
- Credit card finance charges 2,600
- Tax return preparation fees ($600 is allocable to Chanelle's business) 1,000
- Sales tax on purchases during the year 6,200
- Interest from a savings account 800
- Interest from City of Boston Bonds 700
- Dividend from 3M stock 400
Prepare Kelly and Chanelle's taxreturn Form 1040 and Schedules A, B, C, D, and SE for the current year.