Beth r jordan tax return solution

ACCT 351 Group Project: Instructions Fall 2018 Part I. Tax Research (10 points) FACTS: Beth’s sister, Jane, suffers from a degenerative spinal disorder. Jane’s physician said that swimming could help prevent the onset of permanent paralysis and recommended the installation of a swimming pool at her residence for her use. Jane’s residence had a market value of approximately $500,000 before the swimming pool was installed. The swimming pool was built, and an appraiser estimated that the value of Jane’s home increased by $98,000 because of the addition. The pool cost $194,000, and Jane claimed a medical expense deduction of $96,000 ($194,000 − $98,000) on her tax return. Upon audit of the return, the IRS determined that an adequate pool should have cost $70,000 and would increase the value of her home by only $31,000. Thus, the IRS claims that Jane is entitled to a deduction of only $39,000 ($70,000 − $31,000). ASSIGNMENT: Use Checkpoint to research Jane’s tax situation. 1. Find the Treasury Regulation that addresses whether capital expenditures can be deducted as a medical expense and provide the citation. a. Your citation should include subparagraphs (i.e., three parentheses). i. For example: Reg. § 1.162-5(b)(3)(i) ii. Do not put spaces between the parentheses. 2. Find the court case that most closely mirrors Jane’s situation. What is the taxpayer’s last name? 3. Once you have located the court case, click on the buttons “FTC” and “Citator” at the top to answer the following questions: a. Read the headnote of the decision from the original court of jurisdiction (trial court). Was the decision in favor of the taxpayer or the IRS? b. Was the case appealed? If so, was the appellate court decision in favor of the taxpayer or the IRS? 1 Part II. 2018 Tax Return (30 points) Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth's birthday is July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund. The following information is shown on Beth's Wage and Tax Statement (Form W–2) for 2018. Line Description Amount 1 Wages, tips, other compensation $65,000.00 2 Federal income tax withheld 10,500.00 3 Social Security wages 65,000.00 4 Social Security tax withheld 5 Medicare wages and tips 6 Medicare tax withheld 15 State 16 State wages, tips, etc. 17 State income tax withheld 4,030.00 65,000.00 942.50 Arizona 65,000.00 1,954.00 During the year, Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099–INT. She received qualified dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth's dividend payments on a Form 1099–DIV. Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2018. On her 2017 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld by her employer. Fees earned from her part-time tax practice in 2018 totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service. On February 8, 2018, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, 2018, Beth sold the stock for $14 a share. Beth bought a used sport utility vehicle for $6,000 on June 5, 2018. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash.