1.2 2 lab determining longitude and latitude answers

Tax Return Project

ACCT 426, Fall 2018

Instructor: Jenny Wing Liu, CPA, MST

Problem: Attached

Requirements:

1. Prepare the 2017 federal income tax return on the appropriate IRS forms. You are required to make manual entries (okay to type on PDF forms) on IRS forms to receive any credit. Print out from any tax return preparation software is not acceptable for grading purposes. Copies of the forms and instructions are available at www.irs.gov.

2. Use the sequence numbers in the upper right-hand corner of the official IRS forms for the property order.

3. Prepare a brief top sheet summarizing the factual information in the format of the tax formula. You must use Excel spreadsheet to prepare this summary.

4. Do not calculate next year’s estimated tax or any late filing or late payment penalty or interest, if there is a balance due.

Grading and Due Date: See Syllabus

Strategy:

1. Download a copy of the Form 1040 instructions from the IRS website. It will be helpful to figure out the forms, schedules and worksheets needed to complete this project.

2. You might want to start with page 1 of the 1040 and manually make entries (pencil recommended). You may then need to do subsidiary forms (e.g., Schedule A, Schedule B, etc.)

3. Based on the information given, download the recipient instructions of the form, which will give you instructions how and where to include the information on the tax return. For example, the information given includes a W-2 form. Download the W-2 form instructions for recipients, which would tell you how to include the W-2 information on Form 1040.

4. Go through the information given to figure out the applicable subsidiary forms, such as Schedule A, Schedule B, Schedule D, etc. needed.

5. All information given is useful for the tax return. Start early, because this is a time consuming project.

Tax Return Project

ACCT 426, Fall 2018

Instructor: Jenny Wing Liu, CPA, MST

Frank and Mary Carter are new clients to the firm. Frank is an attorney and Mary is a consultant. We will be preparing their 2017 Federal income tax return.

Frank and Mary will be filing jointly and have the following personal information:

Social Security # Date of Birth

Frank Carter 476-48-8888 1/22/1958 Mary Carter 746-58-9999 6/17/1962

Son:

Thomas Carter 231-88-9876 1/5/2003

Address: 735 Carnegie Street, San Bernardino, CA 92408

They have given us the attached documents for their tax return.

They have also supplied the following information:

1. Frank is an employee of Inland Attorney At Law Inc, and Frank received a W-2 from the company. The W-2 form has the following information.

Wages: $125,000

Federal income tax withholding: $34,815

California income tax withholding: $4,510

2. Frank is a sole shareholder of Inland Attorney At Law Inc. The company is an S corporation. Frank received a Schedule K-1 for the pass-thru income from the corporation. Frank materially participated in the business for the year. The Schedule K-1 shows $45,150 ordinary business income

3. Frank and Mary received $235 interest income from Nation Bank for their money market account. They also received $300 dividend income from the Disney stock they owned. The dividend is a qualified dividend.

Frank and Mary had the following stock sales in 2017. The investment broker reported the stock basis information to the IRS.

Description

Date Acquired

Date Sold

Quality

Proceeds

Cost

Amazon

01/26/2016

02/16/2017

10 shares

$9,500

$8,200

Apple

09/25/2015

02/16/2017

20 shares

$4,400

$3,900

4. Mary is a consultant working as a sole proprietor. Mary uses cash basis accounting for the activity, and Mary materially participates in the activity during 2017. Mary did not make any payments in 2017 that would require her to file any 1099 forms.

She has given us her business income and expenses information for 2017.

Gross income received $60,000

Expenses paid:

Liability insurance $1,500

Supplies $450

Taxes and licenses $325 Conference registration $1,200

Travel $750

Marketing $2,150

Office rent $12,000

5. Frank and Mary bought a residential rental property in 2017.

Address: 3010 Olive Street, Los Angeles, CA 90001 Purchase date: 2/1/2017 Purchase price: $450,000.

The cost is broken down between land and building as follows:

Land $90,000

Building $360,000

They have given us the following information related to the rental property.

Rental income $30,400

Advertising $425 Insurance $825

Repairs $1,250

Mortgage interest expense $8,750

Property taxes $6,600

6. They received $670 income tax refund from the State of California from their 2016 tax return filed in 2017. They were not subject to AMT for federal income tax purposes in prior year, and they had the tax benefit of deducting the state income tax payment on their prior year’s federal tax return.

7. They provided us the following additional information related to 2017. On their personal residence they paid $4,850 in property taxes and $10,800 in mortgage interest. On their personal autos, they paid $1,080 in DMV fees and the portion based on the value of the vehicles is $525. They made cash donations to the American Red Cross of $15,000 and noncash donations to Salvation Army of $500. All 2016 California tax was paid in 2016.

8. Thomas is a high school sophomore living at home with his parents. He did not work, nor did he have any other income.

9. Frank and Mary do not have any overpayments applied to 2017 from prior year.

10. Frank and Mary made four equal payments of $1,000 each to the IRS for the tax year 2017 on 4/15/2017, 6/15/2017, 9/15/2017, and 12/15/2017 respectively.