Assignment:

Use the template $($lottom of this pagel$)$ to record your response to each of your neighbor's questions.

Use the third column to note anything that you would need to record on their tax return.

Record any event $($and amount if possible$)$ that should be considered for their taxes.

Be complete and comprehensive in your responses

The final part of the project will be to prepare tax return$($s$)$ for your new neighbors

Additional Facts:

You move in July $1,2021.$

Day $10$:

You spend the afternoon making a gourmet dinner using the tomatoes and basil that you grew in your own garden.

Day $11$:

When sitting out at the firepit, Sarah tells you about one of her employees at the small company that she owns. This

employee, Lala has fallen on hard times. Sarah feels badly for her so she loans Lala $$25,000,$ no interest and asks Lala to

pay the loan back in a few years. You wonder is Sarah will ever get the money back.

Day $12$:

You hear arguing from Rudy and Sarah's house.

Day $13$:

You find out that the arguing was with Sarah's X$-$husband. He had just paid Sarah the last alimony check of $$1,000$ per

month this past June. That was the same month that he stopped paying child support of $$400$ a month since that is

when Charlie turned $18.$

Day $14$:

You see an Uber pick up your neighbors as they leave on a two$-$week vacation. Whew!

Day $30$:

The neighbors are back from vacation and they are still really sunburned. They come by to tell you all the highlights of

the trip. The only bad thing that happened was that they were pickpocketed. The swiper got away with $$300$ cash.

Day $31$:

Rudy stops by the firepit to boast about how strategic he is about life. He owns a small business called "From Abroad."

When he travels on vacation with his family, he brings back $3$ souvenirs and lists them for sale on eBay. He says this

allows him to deduct all the expenses of the vacation because this vacation expense was needed to attain the items to

sell. He purchased $3$ blankets for $$30$ each. He has already sold these on eBay for $$50$ each. The total cost of the vacation

was $$8,000.$ What questions would you ask Rudy to see if his vacation strategy is right? Day $32$:

Rudy comes by again. Before you can say that you have some concerns about his $$From Abroad$$ business, he tells you about another side business that he is just starting. This business, Rudy$$s insurance Co$.,$ is a small insurance sales company. He intends to hire $2$ employees by the end of the year. He spent $$6,000$ in qualifying start up costs that included computers, office furniture and supplies. Throughout the rest of the year, the costs are minimal. This business makes sense since Rudy is currently employed by an insurance company as a salesperson.

Day $33$:

You run into Charlie out front. He seems to be with some shady friends. After they leave, you confront Charlie. He seems almost proud that he is selling drugs to some of the teens in the neighborhood. He says that he has earned over $$10,000$ and his cost of good sold was only $$1,000.$ He admits that he has other expenses though of $$3,000$ for driving, security and packaging materials.

Day $34$:

Although the neighbor$$s house seemed quiet while they were gone, you find out they rented out for $10$ of the $14$ days for $$1,000.$ This is the only time this year that they rented it out.

Day $35$

Rudy takes a client to dinner related to his new start up$,$ Rudy$$s Insurance Co$.$ You see him come home and you stop to say hi$.$ What do you recommend to him with respect to the dinner in case he wants to claim it as a business expense? In addition to dinner, Rudy gave his client a $$50$ gift card to a local wine shop.

Day $36$

All is quiet today

Day $37$

While you are relaxing at your firepit, Sarah and Rudy come by explain to you that they probably aren$$t going to put in a pool. They want to invest some money for retirement instead. They aren$$t sure how to do this or what the difference between a conventional IRA or a Roth IRA. What do you tell them?

Day $38$

Rudy and Sarah thank you for explaining the IRAs to them. They bring you a cake as a thank you. They also tell you that they invested the full amount into a conventional IRA $6,000$ and also the maximum for their two younger children$$s educational IRAs $($also called a CESA$)2,000$ each. How much do they invest? Day $39$

Rudy bought too many printers for his new insurance business. He sells you one for $$500.$ He paid $$550$ for the printer one month ago. He wants to take the most depreciation expense as he can.