ACCT 430 Income Tax Spring 2018

Final Tax Return (100 pts)

Required:

• Use the following information to complete Oliver and Kathy Samuels' 2017 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps. Round amounts to the nearest whole dollar.
• You will need to submit the following forms: Form 1040, Schedule A, Schedule D, Form 8949, Schedule E and Form 4562. The forms have been provided here. They can also be found on the IRS website (www.irs.gov) along with the form instructions. The instructions can be helpful in completing the forms.
• Read the facts and follow form instructions carefully.
• Facts:
• Oliver and Kathy Samuels (ages 39 and 37) are married and live in Charlotte, NC. Their address is 1308 Chatham Ave, Charlotte, NC 28205. They have 3 children, Jack (9), Caroline (6), and Henry (3). Their social security numbers are:

Oliver Kathy Jack Caroline Henry

111-22-3939 222-33-3737 333-44-9999 444-55-6666 555-66-3333

1. Oliver Samuels is employed as a corporate attorney for Duke Energy. He provides the following Form W-2 information:

Line 1 Wages, tips, other compensation Line 2 Federal income tax withheld Line 3 Social Security wages

Line 4 Social Security tax withheld

Line 5 Medicare wages and tips Line 6 Medicare tax withheld

Line 17 State income tax withheld

$194,000 33,000 127,200

7,886 212,000 3,074 8,100

He participates in Duke Energy's 401(k) plan as well as the nonqualified deferred compensation plan offered to key employees. He deferred $13,000 of salary in the NQDC plan during 2017.

2. Oliver received $10,000 of ordinary dividends - $8,000 qualified and $2,000 non-qualified. Kathy received $1,800 of interest on corporate bonds.

1. Oliver and Kathy reported the following information related to investments:

• They have a long-term capital loss carryover from last year of $6,000.
• They sold Oliver's rare coin collection this year for $40,000. He had accumulated the
• coins over a period of several years before getting married. Oliver had a basis of
• $29,000 in the collection.
• They sold the following stocks during the year:
• Note: All stock transactions were reported on Form 1099-B, including basis.

1. Oliver and Kathy own rental property in Florida. The address is 631 Gulf Shore Drive, Destin, FL 32541. The property was purchased June 1st, 2009 at an original cost of $400,000. The fully furnished property is rented year-round. Gulf Coast Realty is engaged as a property manager to manage the rental work.
2. The following assets were placed in service during 2017:
3. Note: Do not claim any bonus depreciation or Section 179 expensing on any of these assets.
4. In 2017, the property brought in $2,200 per month in rent, with 10% of each rental payment being taken by Gulf Coast Realty as property management fees. The Samuels also incurred the following expenses related to this property:

Description

Date Purchased

Basis

Date Sold

Amount Realized

1,000 sh. ABC

1/8/2014

$ 900

4/9/2017

$ 300

50 sh. DEF

8/31/2016

2,500

6/13/2017

3,750

75 sh. GHI

11/14/2012

3,600

6/30/2017

5,200

200 sh. JKL

3/16/2017

4,400

12/14/2017

3,600

Item

Date Purchased

Amount

Furniture

March 10

$12,500

Roof replacement

October 21

$ 6,500

Advertising Cleaning service Insurance Mortgage interest Property taxes Utilities

$ 450 1,250 1,750

10,200 3,850 3,400

1. Both Oliver and Kathy had traditional IRAs that they rolled over into Roth IRAs during 2017. They received Forms 1099-R showing the IRA account balances at the time of distribution were $15,000 and $10,000, respectively. The amounts were contributed to their Roth IRA accounts within 60 days.
2. Oliver and Kathy paid $21,300 of interest on their primary residence (acquisition debt of $450,000). They also paid $4,150 of real estate taxes on the home.
3. The Samuels had an $850 balance due on their North Carolina income tax return last year (2016 tax return filed in 2017). They also paid $1,050 of personal property taxes.
4. Oliver and Kathy made the following cash contributions this year:

Emmanuel Church United Way University of NC

$ 16,700 2,600 2,500

1. The Samuels did not make any quarterly estimated payments during 2017. There was an overpayment of $3,000 on their 2016 Form 1040 that they elected to apply to 2017.
2. Oliver and Kathy provide the following additional information:

o They both want to contribute to the presidential election campaign.

o Neither of them have any foreign bank accounts or trusts.

o They had qualifying insurance for purposes of the Affordable Care Act (ACA). o Oliver and Kathy do not want to name anyone as a third party designee.

o Any overpayment should be applied to next year.

You have been contracted to prepare the Samuels' personal federal income tax return for 2017. Unless specifically stated otherwise above, they want you to take any tax positions you can to minimize their tax liability.

Additional information/reminders:

• Make sure to complete all parts for which you are given information.
• You do not need to include Schedule B
• Schedule E - you do not need to include Form 8582