Tax-QA425

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Important to Note
 

Assignment contain 2 questions

 

Q1 is the theory question

 

Q2 is the problematic question (Issue, Law, Application and Conclusion)
 

But same assignment is sent by my TWO other friends also everyone needs different wording NOT same because we need to submit plagiarism report which should not exceed 20% if the wording are same then automatically we three are fail  I know that Law must be same but other wording we don’t need same.

 

From the information below, prepare the federal tax return for William and Joyce Jones. Attach to your return a statement describing how you treated each of the items listed 1 through 24 below.

 

The taxpayers live at 4400 Massachusetts Ave, in Washington, D.C. 20016. William is 53, and Joyce is 51. William is a manager for ABC Corporation, a firm that manufactures and distributes widgets. Joyce is a self-employed author of children’s books. The Jones have three children, Will, 21, Dan, 19, and Tom, 16. In February of this year, the Jones provide the following basic information for preparing their prior year federal income tax return.

 

• They are on the cash method of accounting and their return is due April 15.
• They wish to minimize their tax by deferring income and accelerating deductions when possible.

 

• Joyce’s social security number is 471-42-5207.
• William’s social security number is 150-52-0546.

 

• Will Jr’s social security number is 372-46-2611.
• Dan’s social security number is 377-42-3411.

 

• Tom’s social security number is 375-49-6511.
• The taxpayers do not wish to contribute to the presidential election campaign and have no interest in foreign trusts.

***

1. William’s W-2 consists of the following:

 
BOX 1 – Wages                                                                                         $140,000
 
2 – Withholding                                                                                             22,000
 
12c – Group term life insurance in excess of $50,000                                       100

12d – Contribution to 401(k) plan                                                                  7,000

 

 
2. The taxpayers received the following interest payments

XYZ Bank of Bermuda ($20,000 balance)                                                    $700

New York State Bonds ($20,000 face)                                                          600

New York City Bonds ($20,000 face)                                                                       1,000

Puerto Rico Bonds ($20,000 face)                                                                 500

Ford Motor Bonds ($20,000 face)                                                                  600

$120 of back-up withholding was paid to the IRS from the $600 payment.
 

 
3. Joyce and her brother are co-workers of, and active participants in, a furniture-restoration business. Joyce owns 30 percent, and her brother owns 70 percent of the business. The business was formed as an S corporation and paid a dividend of $4,800 to Joyce. The basis of Joyce’s stock is $31,000. Joyce’s share of the corporation’s income for the year was $5,000 and her share of the corporation’s §179 election was $500.

 

4. The Jones’s received a federal income tax refund of $1,217 on May 12. On May 15, they received a refund from the District of Columbia for $900 which they had deducted on the preceding year’s return.

 

5. Joyce is the lucky caller to a local radio station and wins a tablet. She has not received a 1099-MISC, but in announcing the prize, the radio station host said that the manufacturer’s suggested retail price for the tablet is $525. However, Joyce has a catalog from Radio Shack that advertises the tablet for $450.

 

6. The Jones’ receive a Form W-2G for their winnings at a local casino showing gross winnings of $5,000 and $1,200 of withholding tax. Joyce knows she lost at least $6,000 at the casino during the year.

 

7. Joyce is active in the school PTA. During the year, she receives an award (a plaque and a $100 gift certificate that were donated to the PTA by local merchants) for outstanding service to the organization.

 

8. As a freelance writer, Joyce incurs costs associated with preparing a manuscript for which she does not yet have a contract. During the year, Joyce makes 4 business trips, each 3 days long, to meet with various publishers. For shorter trips that are closer to home she either drives or takes the train and returns on the same day. In December, Joyce receives an advance on her next book. Under the contract, Joyce is scheduled to begin work on the book the following February, and must have it completed by November. The taxpayers have 2 telephone lines in their home with Joyce having a separate phone number for her business. The information on Joyce’s business is listed below.

 

Royalties: West Publishing                                         $4,000

Publishers Advance                                                    $5,200

Office Supplies                                                           $200

Train Tickets                                                               $800

Airfare (4 trips)                                                           $2,500

Lodging (12 nights)                                                    $3,000

Meals (12 days)                                                           $700

Telephone ($100 monthly fee per phone line)            $2,400

Parking Tickets                                                           $200

Interest on Auto                                                          $300
 

 
9. In January, Joyce purchases a used car for $15,000 to use in her business. Joyce pays $2,200 in cash and finances the balance through the dealer. During the year, she drives a total of 5,000 miles, 2,000 of which are for business that she has properly documented. She pays $200 for insurance and $500 for gasoline.

 

10. Joyce’s office is located in a separate room of the house and occupies 250 square feet. The total square footage of the house is 2,500. The taxpayers purchased the home in 1999, for $70,000, with approximately 20 percent of the purchase price allocated to the land. The total household expenses for the year are as follows:

Heat                                                                            $2,000

Insurance                                                                     $1,500

Electricity                                                                    $700

Repairs to kitchen                                                       $3,000

Cleaning                                                                      $1,000
 

 
11. William began work on his MST at American University. He enrolled in two courses and payed $3,200 in tuition and $260 for books.

 

12. William and Joyce each contribute the maximum to their respective IRA accounts for the year. The IRA account is Joyce’s only retirement vehicle. In addition, William and Joyce contributed $2,000 to a Coverdell Education Savings Account for Tom.

 

13. In June, the taxpayers’ 2012 station wagon is totaled during a hurricane. The car was purchased for $28,700. The taxpayers received a check for $21,200 from the Insurance Company that represents the fair market value of the car minus a $750 deductible and they replace the car with a new car costing $31,400.

 

14. The taxpayers incurred the following medical expenses before receiving $700 reimbursement from their health insurance policy

 

Medical premiums                                                       $7,000

Doctors                                                                       $5,000

Chiropractor                                                                $1,000

Dentist                                                                        $2,000

Vet Fees (family dog Sandy)                                      $500

Prescription drugs                                                       $3,000

Over-the-counter drugs (aspirin, cough syrup)           $500

In addition, William purchases a back brace for $700, recommended by his chiropractor, to help strengthen his back muscles.
 

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15. The taxpayers pay the following property taxes:

House                                                                          $9,000

William’s car (ad valorem)                                          $500

Joyce’s car (ad valorem)                                             $700
 

16. The taxpayers receive two form 1098s for the interest paid on bank loans. They also pay interest on their personal credit cards.

Bank of America 1098 (4400 Mass Ave)                   $9,000

Sun Trust 1098 (Home Equity)                                   $4,000

Sear’s                                                                          $200

Bank of America Mastercard                                      $150

The proceeds from the home equity loan were used to renovate their kitchen and pay for Tom’s tuition at private school. The interest on the portion of the loan used for private school tuition is $1,000.
 

17. The taxpayers have receipts showing cash contributions to the United Way ($2,000), American University ($3.000), and their local church ($1,000). They also donate the following property to the Salvation Army, at High Street in Washington, D.C., on July 15:

 

Property	FMV (self-appraised)	Original Cost	Date Acquired
Antique Table	$400	$225	1/4/02
Dishwasher	$100	$700	5/6/06
Sofa Bed	$200	$800	3/14/08

 

18. The taxpayers incur the following expenses:

Type	Amount
Prior year tax preparation fee (paid in current year)	$900
Safety deposit box	$50
Investment journals	$400
Investment advice	$1,200
Business publication (William)	$700

 

 
19. The taxpayers made the following estimated tax payments:

Date	Federal	D.C.
April 15	$300	$1,000
June 15	$300	$1,000
September 15	$300	$1,000
January 15	$300	$1,000

 

 
20. The taxpayers paid $7,000 in tuition, $800 for books, and $6,000 for room and $5,000 for board for Will Jr., a junior, to attend American University. They also paid $8,000 is tuition, $700 in books, and $5,000 in board for Dan, a freshman at American.

 

21. In February, William inherits his father’s summer home that has a FMV of $540,000 at the date of his father’s death. His parents had purchased the house in 1975 for $135,000 and made $75,500 worth of capital improvements to it. Twenty percent of the total value of the property is attributable to land. Because William and Joyce ultimately would like to use the property as a vacation home, they decide to rent it out. William actively participates in the management of the property. The property is first advertised for rent on March 1, but is not rented until April 15. William provides the following income and expense information for the property:

Rent                                                                $20,000

Repairs                                                            $6,000

Management fee                                             $4,000

Property taxes                                                 $10,000

Insurance                                                         $3,000

In addition, in March William buys a new stove for $2,000 and a new refrigerator for $1,000.
 

22. The taxpayers receive Form 1099-B totaling $41,000 from Fidelity for the sale of several securities. The selling price listed is net of brokerage commissions and represents the amount the taxpayers receive from the sale.

Stock	Date Acquired	Date Sold (all sales in current year)	Sale Price	Purchase Price
150 shares Pfizer Corporation	5/12/90	8/15	$6000	$ *
300 shares Texas Instruments	7/30/95	10/25	$17,000	$ 7,000
50 shares Alcoa	6/10/07	10/23	$500	$2,000
25 shares Luminent	4/28/Current Year	9/4	$900	$2,000
60 shares Textron	9/11/Current Year	10/27	$10,000	$9,000
300 shares Hasbro	1/7/02	12/20	$6,000	$7,000

 

 
23. On May 18, Joyce purchases a computer system for $2,000. She also buys a color printer/copier/fax machine for $500. All the equipment is used exclusively in her business.

 

24. On June 12, Joyce sells her old computer system for $400 and her printer for $100. She had acquired the computer system and printer on February 18, 2010, for $3,000 and $500, respectively. When the taxpayers prepared their 2010 tax return, they elected to expense the computer and printer using Section 179. The computer system and the printer were used exclusively in her business.

 
Final Problem

 

Hermione and Sebastian are married and have three children living at home for whom they provided over half of their support: Jeremy, age 21, goes to college full-time and earned $7,000 from his part-time job and $500 in interest income from his savings account; Emma is 19 and earned $19,000 as a secretary; Serena is 15 and is in high school. Serena made $42,000 as a model this year, all of which was put into a trust account except for her manager’s fee. Sebastian made $65,000 this year as an engineer and Hermione earned $7,000 as a substitute teacher. If they have $18,000 of itemized deductions and Serena makes a fully deductible contribution to her IRA of $2,000, what is Hermione and Sebastian’s gross income, adjusted gross income and taxable income on their joint return this year? Show all calculations and explain fully any assumptions you are making.

 

Product code:Tax-QA425
 
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