Problem -

Complete the following problem. YOU SHOULD NOT GIVE OR RECEIVE HELP FROM ANYONE.

George (12/24/1973) and Mary Bailey (6/29/1974) are married. They have two children remaining at home Zuzu (223-07-5439), (DOB 6/29/2006), and Harry (324-92-1765), DOB (1/4/1998) who is a full-time college student. They also had a cousin Clarence Bailey (213-34-5667) (DOB 9/6/1949) who stayed with them for five months while he was waiting for admission to flight school.  Clarence's only income was Social Security of $5,400 and George and Mary provided 100% of his support while he was with them. Both George and Mary work for the building and loan his father founded. Their W-2's are included on the next page. The Bailey's have also assembled the following list of expenses:

On February 12, thieves broke into the Bailey's home. They were not insured against theft. They notified the police immediately.  The following items were stolen:

A stereo which cost $1,400 when purchased December 17, 2014. Fair market value at the time of the theft was $600.

A computer which cost $2,198 when purchased January 15, 2014. Fair market value at the time of theft was $1,550 Silverware which cost $2,400 when purchased May 15, 2006.  Fair market value at the time of theft was $4,500.

The Bailey's itemized deductions last year and received a refund from the state of North Carolina of $870. The Baileys paid college expenses for Harry who is in his first year at Bedford Falls University.  They paid $3450 in tuition and fees, $700 in books, and $960 for a computer for Harry to take to college. Harry received a scholarship of $1200. George is also taking a course at AB Tech to improve his computer skills so he can work more efficiently.  The cost of the computer course was $202 and books were $90.

George's father died during the year and left him $25,000 from the proceeds of a life insurance policy. The Baileys used it to fix up the old house they are living in. The Baileys paid child care for Zuzu $4,200 to Rose Petal Day Care (56-1223432) at 122 Old House Way, Bedford Falls 28802.

The Baileys had $270 in interest from an account they had at the Building and Loan and $167 interest from State of NC bonds. They had dividends of $398 from Disney, and $759 from Ghostbusters Corp. The dividends from Disney are qualified dividends. They each received a $25 gift certificate from Ingles as a holiday gift from the Savings and Loan. George also received $75 in jury duty pay. On an outing with her friends to Harrah's Cherokee Casino, Mary won $400. Her gambling losses amounted to $525. The Savings and Loan paid health insurance premiums for Mary and George of $7,638.

You should complete a 1040 along with all necessary schedules and forms. The return is due at the beginning of class on December 8th.

Attachment:- Assignment.rar