ACCT 4260, Tax Return Project - 2Problems: Chapter 7-47 (Denise Lopez) South-Westerns Federal Taxation, Comprehensive Volume (2022). Prepare the Tax Return for 2021 Changes to Problem:None. The following information should be helpful in your preparation of the tax return.(1)(a)Requirement: Prepare the federal income tax return on the appropriate IRS forms. (Even if you use a software program, you must turn in manual entries on IRS forms.) Copies of those forms and instructions are available at www.irs.gov FOR ELECTRONIC SUBMISSIONS IN ONLINE CLASSES, PLEASE MAKE EVERY EFFORT TO SUBMIT, IF POSSIBLE, EITHER A SINGLE PDF OR A SINGLE WORD DOCUMENT OF THE ENTIRE TAX RETURN. THANK YOU

HERE is the Question

Denise Lopez, age 40, is single and has no dependents. She is employed as a legal secretary by Legal Services, Inc. She owns and operates Typing Services located near the campus of Florida Atlantic University at 1986 Campus Drive, Boca Raton, FL 33434. Denise is a material participant in the business, she is a cash basis taxpayer, and her Social Security number is 123-45-6781. Denise lives at 2020 Oakcrest Road, Boca Raton, FL 33431. Denise wants to designate $3 to the Presidential Election Campaign Fund. She has never owned or used any virtual currency. Denise received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored. During 2020, Denise had the following income and expense items:

1. $100,000 salary from Legal Services, Inc.

2. $20,000 gross receipts from her typing services business.

3. $700 interest income from Third National Bank.

4. $1,000 Christmas bonus from Legal Services, Inc.

5. $60,000 life insurance proceeds on the death of her sister.

6. $5,000 check given to her by her wealthy aunt.

7. $100 won in a bingo game.

8. Expenses connected with Typing Services:

   Office rent	$7,000
   Supplies	4,400
   Utilities and telephone	4,680
   Wages to part-time typists	5,000
   Payroll taxes	500
   Equipment rentals	3,000

9. $9,500 interest expense on a home mortgage (paid to Boca Raton Savings and Loan).

10. $15,000 fair market value of silverware stolen from her home by a burglar on October 12, 2020. Denise had paid $14,000 for the silverware on July 1, 2010. She was reimbursed $10,000 by her insurance company.

11. Denise had loaned $2,100 to a friend, Joan Jensen, on June 3, 2016. Joan declared bankruptcy on August 14, 2020, and was unable to repay the loan. Assume that the loan is a bona fide debt.

12. Legal Services, Inc., withheld Federal income tax of $15,000 and the appropriate amount of FICA tax from her wages.

13. Alimony of $10,000 received from her former husband, Omar Guzman; divorce was finalized on December 2, 2013, and no changes have been made to the divorce decree since that time.

14. Interest income of $800 on City of Boca Raton bonds.

15. Denise made estimated Federal tax payments of $2,000.

16. Sales taxes from the sales tax table of $953.

17. Property taxes on her residence of $3,200.

18. Charitable contribution of $2,500 to her alma mater, Citrus State College.

19. On November 1, 2020, Denise was involved in an automobile accident. At the time of the accident, her automobiles FMV was $45,000. After the accident, the automobiles FMV was $38,000. Denise acquired the car on May 2, 2019, at a cost of $52,000. Denises car was covered by insurance, but because the policy had a $5,000 deduction clause, Denise decided not to file a claim for the damage.

Part 1Tax Computation

Compute Denise Lopezs 2020 Federal income tax payable (or refund due), and complete her 2020 Federal tax return using appropriate forms and schedules. Suggested software: ProConnect Tax.

Part 2Tax Planning

In 2021, Denise plans to continue her job with Legal Services, Inc. As a result, items a, d, and l will recur in 2021. Denise plans to continue her typing services business (refer to item b) and expects gross receipts of $34,000. She projects that all business expenses (refer to item h) will increase by 10%, except for office rent, which, under the terms of her lease, will remain the same as in 2020. Items e, f, g, j, k, and s will not recur in 2021. Items c, i, m, n, p, q, and r will be approximately the same as in 2020.

Based on this information, Denise would like you to provide a tentative computation of her 2021 taxable income. Prepare a memo to her tax files that details this computation.

.(b)Additional Requirements: Prepare a brief top sheet summarizing the factual information in the format of the tax formula.(2)Strategy: You might want to start with page 1 of the 1040 and manually make entries (pencil recommended if entries on paper forms, or typing into forms at irs.gov and saving pdf of forms). You may then need to do subsidiary forms (e.g., Schedules C). You might also want to work out the figures for the tax formula roughly first before beginning the return.(3)Check figures:Adjusted gross income$105,120 Itemized deductions $16,153Taxable income $88,967(4)Check forms: (please include in your return): (5)Grading:a.Per the syllabus, this manual return is 16% of the grade; i.e., 64 points, since the three exams are worth 100 points each of the 400 possible

points.b.Actual maximum, manual return, 64 points c.Forms: 1040 pages 1 and 2; Schedules 1, A, B, C, D; Form 8995(6)Additional helpful information:a.Please use the sequence numbers in the upper right-hand corner of the official IRS forms for the proper orderb.Do not calculate next years estimates or any late filing penalty or interest.c.The two casualty losses are not deductible because they are not in federally declared disaster areas.d.There is no QBI deduction because there is no QBI on the Schedule C