Leonard Anthony Silverman and Janice Marie Silverman, a married couple, live at 17323 Cheryll Parkway Houston, Texas 77056-3672.  Their home telephone number is (713) 937-5629, home fax number is (713) 867-9311, cell telephone number for Leonard is (832) 284-8604 and cell telephone number for Janice is (832) 940-7146.  Leonard, whose social security number is 455-36-3692 and date of birth is June 6, 1963, is employed as a Systems Analyst for Austin Technology Services, Inc.  Austin Technology Service, Inc. is located at 1200 Louisiana Street Houston, Texas 77002-0002 and its Employer Identification Number is 33-1256894.  Leonard's work telephone number is (713) 752-3931.  Janice's social security number is 443-63-7289 and her date of birth is December 22, 1963.  She is presently employed as a Fuel Accountant by Kelly Oil Company.  Kelly Oil Company is located at 4315 Senecka Drive Houston, Texas 77054-6290 and its Employer Identification Number is 42-8715965.  Janice's work telephone number is (713) 772-2953.  The Silvermans have three (3) children who lived with them for the entire year of 2012 and that they fully supported for the entire year of 2012.  The three (3) children are Larry Eugene Silverman (age 16 (date of birth October 21, 1996) and social security number 656-36-6441), Denise Alice Silverman (age 14 (date of birth March 14, 1998) and social security number 662-57-3325) and Julie Erin Silverman (age 6 (date of birth January 12, 2006) and social security number 688-37-1849).

The Silvermans, who neither wishes to contribute to the Presidential Election Campaign Fund, have presented you with the following information to prepare their 2012 Federal Income Tax Return:

(a) Leonard earned a salary from Austin Technology Services, Inc. of $61,680 (also Social Security Wages and Medicare Wages).  Federal Income Taxes withheld from his pay was $5,690, Social Security Taxes (FICA) withheld was $2,591 and Medicare Taxes withheld was $894.  Leonard is covered by a retirement pension plan provided by Austin Technology Services, Inc.

(b) Janice earned a salary from Kelly Oil Company of $46,320 (also Social Security Wages and Medicare Wages).  Federal Income Taxes withheld from her pay was $4,910, Social Security Taxes (FICA) withheld was $1,945 and Medicare Taxes withheld was $672.  Janice is covered by a retirement pension plan provided by Kelly Oil Company.

(c)        The Silvermans received Interest on Savings Accounts of $640 from First Houston Bank and Interest of $480 from City Of Houston Municipal Bonds (local government bonds) that they own.  In addition, the Silvermans received Cash Dividends of $520 (all "Qualified Dividends") from Common Stock owned in Alexander Corporation.

(d)       Janice operates an Income Tax Preparation Service out of her home during the Income Tax season.  Janice uses a certain portion of her home for business purposes but not on a regular and exclusive basis.  The name of Janice's business is Silverman's Professional Income Tax Service and she has operated this Sole Proprietorship since January 2009.  Janice uses the Cash Method Of Accounting for Federal Income Tax purposes for the business and the business code for the business for Federal Income Tax purposes is 541213.  Relevant Financial Information for the business for 2012 is as follows:

                        Service Fees                                                                $7,600

                        Expenses

                        Advertising                                                                      275

                        Entertainment Of Clients                                                 340

                        Interest (Credit Card Debt)                                             125

                        Seminar (Income Tax Related)                                        200

                        Supplies                                                                            310

            (All of the above Service Fees And Expenses represent Cash transactions that occurred

             during the year of 2012)

            Janice also drove in 2012 her personal automobile, a 2011 Pontiac Grand Am which she acquired on August 15, 2011, a total of 1,000 miles for business purposes.  Janice has always used the automobile in her business and drove the automobile a total of 15,000 miles for the entire year of 2012 including 5,200 of commuting miles (Beginning Mileage Reading was 35,000 miles and Ending Mileage Reading was 50,000 miles).  Janice uses the Standard Mileage Method (Automatic Mileage Method) ($.555 per mile in 2012) to recover the cost of using her automobile for business purposes.

            In addition, Janice purchased the following items for her business in 2012:

            Description                                            Amount                     Date Purchased

            Personal Computer And Printer          $1,800.00                    January 2, 2012

                        (Five-Year Property)

                        Computer Software                            $   400.00                    January 2, 2012

                        (Three-Year Property)

Furniture And Fixtures                       $1,200.00                    March 5, 2012

(Seven-Year Property)

            Janice elected to take the Section 179 Deduction for all of these assets.

(e)        Janice incurred unreimbursed employee related expenses as follows:

                                    Education                    $250

                                    Professional Dues         125

(f)        The Silvermans also own two (2) rent homes that they rent out (Actively Participate) to people unrelated to them.  The first rent home (Rent Home Number 1) (not low-income housing) is located at 262 Calley Street Houston, Texas 77044-4824.  The Silvermans originally began to rent this home on June 1, 2003 when its depreciable basis was $40,000 (total cost of $46,000 less $6,000 allocated to the Land).  The second rent home (Rent Home Number 2) is located at 4742 Essie Avenue Houston, Texas 77045-3842.  The Silvermans originally began to rent this home on November 1, 2011 when its depreciable basis was $44,000 (total cost of $54,000 less $10,000 allocated to the Land).  Relevant information that pertains to these two (2) rent homes for 2012 is as follows:

                                                                        Rent Home                              Rent Home

                                                                         Number 1                               Number 2

                        Total Rent Revenues                 $6,000                                      $8,200

                        EXPENSES

                        Insurance                                       650                                                       800

                        Mortgage Interest                      2,800                                                    3,600

                        Repairs                                                      410                                                       325

                        Property (Real Estate) Taxes     1,420                                                   1,560

                        Lawn Maintenance                       300                                                      300

            (All of the above Rental Revenues and Rental Expenses represent Cash transactions that

 occurred during the year of 2012)

            In addition to the above, Leonard Silverman drove in 2012 his personal automobile, a 2012 Ford Taurus, in attending to the rental properties a total of 400 miles for Rent Home Number 1 and 300 miles (25 miles per month) for Rent Home Number 2.  Leonard has always used the Standard Mileage Method (Automatic Mileage Method) in recovering the cost of using his automobile relating to the rental properties.  Finally, on August 18, 2012, the Silvermans purchased new appliances (ie. refrigerator, stove and dishwasher) (five-year property) for Rent Home Number 1 for a total purchase price of $2,200.

(g)        Leonard attended in April 2012 a Systems Analyst Seminar in Phoenix, Arizona.  He incurred unreimbursed expenses of $925 for airfare, lodging and meals ($150 of the $925 was for meals).

            In addition, Leonard drove in 2012 his personal automobile a total of 1,500 miles for work related purposes (125 miles per month).  Leonard purchased the car on April 1, 2012 and has always used it for work related purposes.  He drove the car a total of 12,000 miles in 2012 of which 5,200 were commuting miles (average daily round trip commuting distance of 20 miles per day) (Beginning Mileage Reading was 0 miles and Ending Mileage Reading was 12,000 miles).  Leonard has always used the Standard Mileage Method (Automatic Mileage Method) in recovering the cost of using his automobile for work related purposes. 

(h)        The Silvermans incurred the following personal expenses during the year of 2012:

                        Medical Expenses (Unreimbursed) (Various)                         $2,600

                        Real Estate Taxes On Personal Residence                                1,820

                        Home Mortgage Interest On Personal Residence                     8,100

                        (Shunnar Mortgage Company)

Credit Card Interest                                                                1,300

                        Interest On Car Loans                                                                        2,800

                        Charitable Contributions - (Cash) (Various Charities)                         1,900

                        Charitable Contributions - (Property - Clothing, etc.)  (FMV)              400 ($1,000 ORIGINAL COST)

(Goodwill Industries 1240 North Main Street Houston, Texas 77001-8877)

(i) The Silvermans utilizes the Internal Revenue Service (IRS) Optional State Sales Tax Table (See page A-13 through page A-14 of the Instructions for Schedule A) to compute their Itemized Deduction for General Sales Taxes (Their State General Sales Tax Rate is 6.25% and their Local General Sales Tax Rate is 2.00% for a Total Sales Tax Rate of 8.25%).

(j) The Silvermans paid an unrelated housekeeper/child caretaker, Tina L. Banks, (address 314 Winston Street Houston, Texas 77048-7438 and social security number 467-89-1693) and telephone number (832) 436-9210, $300 per month during the entire year of 2012 to care for their youngest child at their home while they were at work.

(k) The Silverman's 2011 Federal Income Tax Liability was $9,574.

(l) The Silvermans did not pay any Estimated Tax Payments in 2012.

(m) The Silvermans will file a Joint Federal Income Tax Return for the year of 2012.

(n) If the Silvermans will receive a refund for their 2012 Federal Income Tax Return, they would like for the refund to be Direct Deposited into their bank account as follows:

Name Of Financial Institution:           Osbourne Bank Of Texas

Routing Number:                    111000025

Checking Account Number:   0012578838534

REQUIRED FORMS AND SCHEDULES

Form 1040          Schedule B        Schedule E        Form2106 (2)       Form 4562 (2)

Schedule A        Schedule C        Schedule SE     Form 2441             Form 8582