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Lance H. and Wanda B.

Dean are married and live at 431 Yucca Drive, Santa


Fe, NM 87501. Lance works for the convention bureau of the local Chamber
of Commerce, while Wanda is employed part-time as a paralegal for a law
firm. During 2014, the Deans recorded the following receipts.
Salaries ($60,000 for Lance, $41,000 for Wanda
) $101,000
Interest income
City of Albuquerque general purpose bonds
$1,000
Ford Motor Company bonds
1,100
Ally Bank certificate of deposit

400

2,500
Child support payments from John Allen
7,200
Annual gifts from parents
26,000
Settlement from Roadrunner Touring Company
90,000
Lottery winnings
600
Federal income tax refund (for tax year 2013)
400
Wanda previously was married to John Allen. When they divorced
several years ago, Wanda was awarded custody of their two children, Penny
and Kyle. (Note: Wanda has never issued a Form 8332 waiver.) Under the
divorce decree, John was obligated to pay alimony and child supportthe
alimony payments were to terminate if Wanda remarried.
In July, while going to lunch in downtown Santa Fe, Wanda was injured
by a tour bus. As the driver was clearly at fault, the owner of the bus,
Roadrunner Touring Company, paid her medical expenses (including a oneweek stay in a hospital). To avoid a lawsuit, Roadrunner also transferred to
her $90,000 cash in settlement of the personal injuries she sustained.
The Deans made the following 2014 expenditures.
Medical expenses (not covered by insurance)
$7,200
Taxes
Property taxes on personal residence
State of New Mexico income tax (includes amount
withheld from wages during 2014)

$3,600
4,200
7,800
6,000
3,600
1,200
5,000
300
500

Interest on home mortgage


Paid church pledge
Life insurance premiums (policy on Lances life)
Contribution to traditional IRA (on Wandas behalf)
Traffic fines
Contribution to the reelection campaign fund of the
mayor of Santa Fe
Funeral expenses for Wayne Boyle
6,300
The life insurance policy was taken out by Lance several years ago and
designates Wanda as the beneficiary. As a part-time employee, Wanda is
excluded from coverage under her employers pension plan. Consequently,
she provides for her own retirement with a traditional IRA obtained at a local

trust company. Because the mayor is a member of the local Chamber of


Commerce, Lance felt compelled to make the political contribution.
The Dean household includes the following, for whom they provide
more than half of the support.
Name/Age
Social Security Number
Birth Date
Lance Dean (age 42)
123-45-6786
12/16/1972
Wanda Dean (age 40)
123-45-6787
08/08/1974
Penny Allen (age 19)
123-45-6788
10/09/1995
Kyle Allen (age 17)
123-45-6789
05/03/1997
Wayne Dean (age 75)
123-45-6785
06/15/1938
Penny graduated from high school on May 9, 2014, and is undecided
about college. This year, she earned $8,500 (placed in a savings account)
playing a harp in the lobby of a local hotel. Wayne is Lances widower father
who died on January 20, 2014. For the past few years, Wayne qualified as a
dependent of the Deans.
Federal income tax withheld is $5,200 (Lance) and $3,100 (Wanda).
The proper amount of Social Security and Medicare tax was withheld. All
members of the family were covered by health insurance for all of 2014.
Determine the 2014 Federal income tax for the Deans on a joint return
by completing the appropriate forms. They do not want to contribute to the
Presidential Election Campaign Fund. If an overpayment results, it is to be
refunded to them.