Gregory and Lulu Clifden's Tax Return
Gregory R. and Lulu B. Clifden live with their family at the Rock Glen House Bed & Breakfast, which Gregory operates. The Bed & Breakfast (B&B) is located at 33333 Fume Blanc Way, Temecula, CA 92591. Gregory's Social Security number is 543-88-9756 and Lulu's is 256-43-8819. Both are in their mid-40s and enjoy good health and eyesight.
1. The Clifdens have three sons, Gerald A. (SS# 466-74-1131), Gary T. (SS# 465-768375), and Glenn E. (SS# 475-23-1426). Gerald is 17 years old, Gary is 12 years old, and Glenn is 10 years old.
2. The Rock Glen House Bed & Breakfast is operated as a sole proprietorship and had the following income and expenses for the year:
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|
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 Rock Glen House Bed & Breakfast uses the cash method of accounting and has no inventory. The employer tax ID number is 95-1234567.
3. The Clifdens made estimated federal income tax payments of $16,000 and estimated state income tax payments of $6,000 (all made during 2014).
4. Lulu is a substitute schoolteacher with the local school district. For the current year, Lulu's Form W-2 from the school district showed the following:
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Wages
|
$10,200
|
|
Federal income tax withheld
|
1,650
|
|
State income tax withheld
|
380
|
|
FICA (OASDI & Medicare)
|
780
|
5. Gregory is retired from the U.S. Navy. His annual statement from the Navy, Form 1099-R, is on Page D-9.