Complete the 2018 federal income tax return for Joseph and Diana Green. In preparing the return, you will need to use schedule A, B, C, D, E and SE form 1040, 2441, 4562, 8582, 8812, 8863, 8949 and other forms if necessary. You have two options: 1) You may use 1040 and other necessary forms for 2018 available at the IRS website. I did not cover the new 1040 and forms in class but feel free to use them if you want. 2) you may use 1040 and forms for 2017 but use the 2018 numbers and rates (e.g., standard deduction, etc.) for calculations. In this case, replace "Exemptions" with "QBI deduction" under line 42 of Form 1040. For the schedule A, you may ignore the miscellaneous itemized deductions subject to 2% AGI. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps.

You must submit a hard copy of the completed tax return on the due date in class. You may turn in your group project before the due date if you want. Tax forms should be assembled in the correct order and bound by a single staple (no folders). You may include supporting evidence to your calculations.

Each student must submit a group evaluation form to a "Peer Evaluation" folder in Dropbox on Beachboard. This form is to be completed on an individual basis. Do not show your form to your group members. Please complete the form before the final. Your group project grade may be adjusted based the input received from your group members.

Graded projects will not be returned, but you are welcome to review them during office hours or by appointment.

Note: You may download the tax forms from the IRS website and prepare the tax return manually - Both new and old forms are available. You may use the instructions for the tax forms from the IRS website. Or you may use a tax software to complete the group project. You can download "TaxAct" tax software from Connect. If you prefer using other tax software, that is fine with me.

Family Information:

Husband

Joseph Green

SSN 598-94-2583

Birthday: 8/21/1964

Wife

Diana Green

SSN 301-52-2942

Birthday: 4/15/1966

Home address

85 North Maple Drive, Long Beach, CA 90231

Son

Alan Green

SSN 614-42-5871

Birthday: 2/08/1998

Daughter

Mary Green

SSN 658-98-7480

Birthday: 6/13/2011

Mother-in-law

Ella Morris

SSN 289-35-4984

Birthday: 9/28/1937

Facts:

1.Diana Green earned gross wages of $95,000 from Apple Corp. Her 2018 Form W-2 shows that $11,400 has been withheld from her paycheck for payment of federal income taxes.

2.Joseph Green also received Social Security benefits of $28,000 in 2018.

3.Joseph Green owns a used bookstore in Long Beach called Story Books. It is a sole proprietorship located at 155 Main Street, Long Beach, CA 90532. Its income and associated expenses for the year ending December 31, 2018, are the following:

Gross Income

$405,000

Less: Cost of Goods Sold

(212,000)

Gross Profit

193,000

Automobile Expense

(5,123)

Depreciation Expense

(21,484)

Office Expense

(10,860)

Supplies Expense

(9,672)

Payroll tax Expense

(14,566)

Meals Expense

(4,000)

Entertainment Expense

(6,000)

Utilities Expense

(4,112)

Salaries and Wages Expense

(98,000)

Property tax Expense

(3,198)

Total Expense

(165,015)

Net Income/(Loss)

$27,985

On January 1, 2018, Story Books purchased a new delivery van for $60,000. The van's weight does not exceed 6,000 pounds. It elected to take a bonus depreciation on the new delivery van. On January 1, 2017, it purchased bookcases (7-year property) for $18,000, and sofas (5-year property) for $8,000. In 2017, bonus depreciation of $9,000 and $4,000 were taken on the bookcases and furniture, respectively. It elected to use MACRS (half-year convention), which results in $2,204 and $1,280 depreciation expenses for the bookcases and sofas, respectively, in 2018.

4.Interest income consists of the following:

Citibank

$800

US Bank

$120

Wells Forgo

205

5.Dividend income consists of the following:

CFD Etrade

$10,100

LUCKY

$4,000

(Qualified, $8,500)

(Qualified, $850)

6.Diana Green is previously divorced (in 2010) from Lef Doel (SSN 453-87-5402), and she had one child with him. In 2018, she made alimony payments totaling $16,000 to him along with child support payments of $8,000. She does not claim this child as a dependent.