Tax Return Project

The purpose of this task so that you can 1.) decide the Taxpayers’ AGI, taxable revenue, tax legal responsibility and tax due/refund and a couple of.) to establish the place the revenue and expense objects are reported on a person tax return. It is necessary so that you can perceive how all of the “items” now we have mentioned this semester match collectively

Directions:

Please obtain the spreadsheet from Blackboard. The tabs on the backside correspond to the completely different varieties wanted for this return. Please full the worksheets. You might want to fill in all yellow and pink packing containers. You will need to present your calculations and label your work. Every particular person is to submit their accomplished spreadsheet on Blackboard by finish of day (midnight) Tuesday, December 1, 2020.

Word:  You might be getting ready the 2019 return on your purchasers as not all the 2020 tax varieties and schedules have been launched at this level.

Shopper Data:

Steven and Lucy Gonzales

Submitting standing = Married submitting collectively

Qualifying kids = Sam (age four) and Charlie (age 6)

2019 Tax Data:

a.)  Steven is a pilot and is employed by Flyby Airways.  His W-2 supplied the next data: Line 1 Wages, ideas & different compensation                                                          $163,000

Line 2 Federal revenue tax withheld                                          $ 25,000

b.)  Lucy is self-employed and runs a bookkeeping enterprise.  The revenue assertion is hooked up.

c.) Steven received $eight,000 on the on line casino in Ruidoso.

d.) Curiosity revenue – $250 from financial savings account at First Lubbock Financial institution; $300 from State of Texas Bond; $130 from US Treasury Bond; $1,800 from CD nonetheless CD was cashed out early and a 10% penalty of $180 was assessed

e.)         Dividend revenue – $2,750 unusual dividends from TXT Co of which $2,500 was certified f.)                Steven and Lucy personal a rental property in Port Aransas, TX. They obtained $9,000 in rental

income and incurred the next bills: Property taxes – $5,400

Repairs & Upkeep – $three,200 Utilities – $2,400

Depreciation – $1,600

g.)           Lucy obtained inventory in Below the Bus Corp. when her grandmother died in February. Her grandmother had bought the inventory in 1992 for $5,000. The FMV of the inventory was $22,000 on the date of her demise. Lucy bought the bought in December for $27,000. (This transaction will not be included within the desk supplied at p.).)

h.) Steven obtained $25,000 money from his great-uncle has a present.

i.)            Steven paid $10,000 in alimony to a former partner and $24,000 in youngster Help. (Steven’s kids from his first marriage are claimed as dependents on their mom’s tax return. The youngsters from his first marriage are completely different than these within the opening sentence. Steven has 4 whole kids, however solely two qualify as his dependents.) The divorce was finalized in 2011.

j.)            The taxpayers bought their boat (personal-use) that they’d owned for 3 years at a lack of ($6,000).

okay.)           Steven and Lucy received a free journey to Mexico after finishing a survey outdoors the grocery retailer.

They had been advised the journey was value $7,800.

l.)            In 2018 the taxpayers had been required to file a state tax return in New Mexico as a consequence of some funding property. In 2019 they obtained a state tax refund of $550. The taxpayers itemized on their 2018 federal revenue tax return. Their whole itemized deductions in 2018 exceeded the usual deduction by $three,500.

m.)         In 2015 the taxpayers received $100,000 within the McDonald’s Monopoly sport. The winnings are paying out over 5 years ($20,000 per yr). This yr the couple obtained $20,900.

n.)          Lucy is a restricted companion (passive) in two completely different partnerships – X and Z.  Partnership X reported her share of the present yr revenue/loss to be ($17,000) and her foundation previous to the present yr loss was $14,000. Partnership Z reported her share of the present yr revenue/loss to be $12,500 and his foundation previous to the present yr revenue was $7,000.

o.)          In January Lucy’s father handed away. Lucy was the recipient of one in every of his life insurance coverage insurance policies. The coverage had a face worth of $500,000. Lucy elected to have the coverage pay out over 20 years. Lucy obtained a examine for $26,000 in December.

Asset Bought Offered Value Foundation Gross sales Value Acquire/Loss ABC Inventory 1/1/2019 7/1/2019 $18,000 $25,000 $7,000 DEF Inventory 1/1/2008 11/20/2019 $15,000 $10,000 ($5,000) Portray (collectible) 1/1/2005 7/15/2019 $5,000 $50,000 $45,000 GHI Inventory 1/1/2010 9/1/2019 $18,000 $30,000 $12,000 Rental Property* 1/1/2005 1/1/2019 $75,000 $130,000 $55,000 JKL Inventory 1/1/2015 10/1/2019 $10,000 $15,000 $5,000

p.)          Moreover, the couple bought the next property throughout the yr:

*Unrecaptured Sec. 1250 acquire = $27,000 (The $27,000 is included within the $55,000) q.) Paid the next out-of-pocket bills throughout the yr:

Medical bills (unreimbursed):

• Physician/hospital/dentist                                $9,500
• Prescribed drugs                                            $800
• Over-the-counter medication                                $200
• Wheelchair                                                         $150
• Veterinarian’s charges (non-service animal) $700
• Beauty surgical procedure (elective)                         $12,000

Taxes:

• Tooth whitening                                               $2,500
• Lasik eye surgical procedure                                              $6,000
• Braces (orthodontics)                                     $5,000
• Steven was injured in an vehicle accident and have become wheel-chair sure throughout the yr. The taxpayers’ spent $10,000 making their residence extra accessible by including ramps and widening doorways. The modifications didn’t improve the house’s FMV. Moreover the couple put a pool within the yard so Josh might do his bodily remedy. The price of the pool was $50,000. An area realtor decided the pool improve the house’s FMV by $42,000.

• Social safety tax withheld from wages $eight,500

	State basic gross sales tax (per IRS desk)	$2,200
	Actual property tax (funding property)	$2,500
	Estimated tax funds (federal)	$6,000
	Actual property tax (main residence)	$5,800
Curiosity:
	Bank card (private)	$400
	Dwelling mortgage (private) (Word = $350,000)	$7,500
	Auto mortgage (private)	$1,500
	Factors paid on acquisition mortgage (20-year observe)	$800

Charitable donations:

• Money paid on to household in want          $500
  • Money to TTU for scholarships                        $7,500
  • Money to political marketing campaign                            $500
  • Home goods (garments, furnishings), that are unusual revenue property, given to American Crimson Cross – FMV = $300; Authentic Value = $1,200
  • Portray (capital acquire property) given to museum; Museum hung portray. FMV = $5,000; Authentic value = $1,000
  • Steven serves lunch each Thursday at a soup kitchen. Whole mileage pushed to and from soup kitchen was 357 miles. (SMR = $zero.14 per mile) Steven’s estimated his time to be valued at $75 per hour. Whole hours for the yr had been 52 hours.
  • The couple bid (silent public sale) on a fishing journey bundle on the American Most cancers Society gala. The couple paid $10,000 for the journey which had a good market worth of $eight,800.

Different unreimbursed bills:

• Playing losses – $5,000

r.)           Further bills:

• Daycare value for Charlie – $eight,250
• Funeral bills for Lucy’s father – $6,200

s.)           Further bills associated to the home:

• Utilities – $7,200
• Insurance coverage – $four,500

• Common repairs & upkeep – $2,300

t.)           Lucy is attending Texas Tech College to earn her grasp’s diploma in accounting.  She is in her fifth yr of upper training. Her tuition and required course bills totaled

$eight,000. Moreover she spend $575 on books. She obtained a scholarship from the Faculty of Accounting for $1,500. She didn’t must carry out any providers with a purpose to obtain the scholarship.

Scarlet & Black Bookkeeping

Income Assertion

For the 12 months Ended December 31, 2019

$       1,200.00 $           275.00

Income                                                                                                                $ 120,000.00

Bills Skilled insurance coverage Coaching seminar Journey to purchasers Lodging Meals Airfare New pc New workplace chair Wages paid to worker Payroll taxes Proprietor distribution Skilled expense (legal professional charge) Workplace provides Late submitting penalty Charitable contributions Contribution to political candidate Whole Bills

$       three,125.00 $       1,250.00 $       1,800.00 $       1,400.00 $           850.00 $ 38,000.00 $       2,907.00 $ 60,000.00 $       1,300.00 $           775.00 $           225.00 $           800.00   $           350.00 $ 114,257.00

Internet Income                                                                                                           $       5,743.00

Further data:

Drove 1,200 miles to go to purchasers’ places of work

Works from residence

Dwelling workplace = 300 sq. ft; Home = three,000 sq. ft