Assignment 5

Comprehensive Tax Return

Read the information below and then fill the 2018 individual Federal income tax return for Kevin and Jim by hand (this means hand written numbers in the forms). You will need the following forms: 1040, Schedules A and B and Form 8283, if necessary. You should use 2018 tax forms and rates (you must use the tax rate tables to find the tax due).Last year they filed as married filing jointly.

In addition to the tax forms, also include a formal memo (typed) to the taxpayers in which you explain very generally how you computed their tax, any assumptions you made or questions you would have liked to know the answers to, and any planning advice you would recommend going forward. The memo can be in any format and should be less than a page long, but more than a few sentences. This is the type of email or letter that would accompany your final deliverable to the client.

FACTS

This is information relating to Kevin and Jim Jones for 2018.Kevin and Jim are married and have 2 adopted children, Aubrynne (a girl) and Bryson (a boy).They live at 236 9^th Ave., New York, NY 10011

Kevin is a lawyer who works for a law firm.Jim works part time in a genetic research lab.

The Jones' Social Security numbers and ages are as follows:

Kevin111-11-111132

Jim222-22-222228

Aubrynne333-33-33335

Bryson444-44-44443

Receipts

Kevin's salary$94,000

Jim's salary 33,000

Municipal bond interest2,400

Interest on C.D.s at Universal Savings3,100

*Qualified dividend on GM stock1,600

*Qualified dividends should be reported as both qualified and ordinary on the tax forms.

Expenditures

Eye exam and eyeglasses for Aubrynne600

Orthodontic work to correct Bryson's congenital defect2,500

Medical insurance premiums (paid on an after tax basis)1,800

State withholding for income tax8,800

Federal withholding for income tax16,000

State income taxes paid with last year's return500

Property tax on condo1,100

Ad valorem Property tax on automobile300

Home mortgage interest10,200

Interest on credit cards200

Cash contribution to Oregon Meditation center3,900

Cash contribution to a senator's campaign1,500

Charitable donation of stock

On September 17, Kevin and Jim donated Beta Trade Inc. stock to Portland State University Accounting Scholarship Fund.Beta Trader, Inc. is publicly traded.Kevin and Jim had purchased the sock on November 7, 2003 for $300.On the date of donation, the fair market value of the contribution is $700.

Miscellaneous

The taxpayers did not have signature authority over a foreign bank account.

The taxpayers did not receive a distribution from a foreign trust.

You do not need any state tax returns.

Do not worry about Alternative Minimum Tax (AMT)

-

Can I have some ideas for writing a memorandum or instructions to approach the tax forms?