Question
Comprehensive Problem 3-2A INSTRUCTIONS: COMPLETE THE LONG'S TAX RETURN INCLUDING FORM 1040, SCHEDULES 1, B & C AND FORM 8829 with the provided information below.
Comprehensive Problem 3-2A
INSTRUCTIONS: COMPLETE THE LONG'S TAX RETURN INCLUDING FORM 1040, SCHEDULES 1, B & C AND FORM 8829 with the provided information below. PLEASE FILL OUT ALL FORMS REQUESTED ABOVE ^.
Russell (birthdate February 2, 1969) and Linda (birthdate August 30, 1974) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landscapes Unlimited (EIN: 32-1456789). The business is operated out of their home, located at 1234 Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russell's bookkeeper provided the following income statement from the landscaping business:
Lawns and Landscapes Income Statement 12/31/2020 Current Period Prior Period 1/1/2020 to 12/31/2020 1/1/2019 to 12/31/2019 REVENUES Lawn maintenance $82,350 $71,998 Lawn and plant installation 34,600 48,576 Other 17,100 8,001 TOTAL REVENUES 134,050 128,575 COST OF SERVICES Salaries 83,433 78,445 Payroll Taxes 6,700 6,432 Equipment Rental 12,600 10,651 Maintenance (Equipment) 8,300 8,435 Special Clothing and Safety Shoes 660 200 Contract Labor 7,780 6,790 TOTAL COST OF SERVICES 119,473 110,953 GROSS PROFIT (LOSS) 14,577 17,622 OPERATING EXPENSES Advertising and Promotion 1,500 700 Donations 600 500 Insurance 4,000 870 Meals and Entertainment 2,300 2,100 Subscriptions 120 120 Business Gifts 790 600 Telephone 2,015 1,956 Training 1,975 Travel 865 750 Other 1,700 2,724 TOTAL OPERATING EXPENSES 15,865 10,320 NET INCOME (LOSS) ($1,288) $7,302
The bookkeeper provided the following additional information:
- Donations expense is a $600 donation to the Campaign to Re-Elect Senator Ami Dahla.
- Training includes $575 for an educational seminar on bug control. It also includes the cost for Russell to attend an online certificate program in landscaping in order to improve his skills and advertise his designation as a certified landscaper. The tuition, fees, and books cost $1,400. He also drove his personal car 57 miles round trip to Boise to take exams three times for a total of 171 miles.
- No business gift exceeded $22 in value.
- The subscription is for a trade magazine titled Plants Unlimited.
The business uses the cash method of accounting and has no accounts receivable or inventory held for resale.
In addition to the above expenses, the Longs have set aside one room of their house as a home office. The room is 160 square feet and their house has a total of 1,600 square feet. They pay $13,200 per year rental on their house, and the utilities amount to $1,800 for the year.
The Longs also have the following interest income for the year from corporate bonds:
Qualified dividends from Potato High Yield Dividend Mutual Fund $44,500
The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively, and each can be claimed for the $500 other dependent credit. Russell's Social Security number is 664-98-5678 and Linda's is 554-98-3946. They made an estimated tax payment to the IRS of $300 on December 31, 2020. The Longs received a $2,400 EIP in 2020.
Required:
COMPLETE THE LONGS TAX RETURN INCLUDING FORM 1040, SCHEDULES 1, B & C AND FORM 8829. PLEASE FILL OUT ALL FORMS.
Assume the taxpayers had full-year health coverage and neither taxpayer wants to contribute to the presidential election campaign.
- If required, enter a "loss" as a negative number on the tax form. Do not enter deductions or other amounts as negative numbers.
- If an amount box does not require an entry or the answer is zero, enter "0".
- Do not round any division. If required, round your final answers to the nearest dollar.
Comprehensive Problem 3-2A
INSTRUCTIONS: COMPLETE THE LONG'S TAX RETURN INCLUDING FORM 1040, SCHEDULES 1, B & C AND FORM 8829 with the provided information below. PLEASE FILL OUT ALL FORMS REQUESTED ABOVE ^.
Russell (birthdate February 2, 1969) and Linda (birthdate August 30, 1974) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called Lawns and Landscapes Unlimited (EIN: 32-1456789). The business is operated out of their home, located at 1234 Cherry Lane, Nampa, ID 83687. The principal business code is 561730. Russell's bookkeeper provided the following income statement from the landscaping business:
Lawns and Landscapes Income Statement 12/31/2020 | ||||||
Current Period | Prior Period | |||||
1/1/2020 to 12/31/2020 | 1/1/2019 to 12/31/2019 | |||||
REVENUES | ||||||
Lawn maintenance | $82,350 | $71,998 | ||||
Lawn and plant installation | 34,600 | 48,576 | ||||
Other | 17,100 | 8,001 | ||||
TOTAL REVENUES | 134,050 | 128,575 | ||||
COST OF SERVICES | ||||||
Salaries | 83,433 | 78,445 | ||||
Payroll Taxes | 6,700 | 6,432 | ||||
Equipment Rental | 12,600 | 10,651 | ||||
Maintenance (Equipment) | 8,300 | 8,435 | ||||
Special Clothing and Safety Shoes | 660 | 200 | ||||
Contract Labor | 7,780 | 6,790 | ||||
TOTAL COST OF SERVICES | 119,473 | 110,953 | ||||
GROSS PROFIT (LOSS) | 14,577 | 17,622 | ||||
OPERATING EXPENSES | ||||||
Advertising and Promotion | 1,500 | 700 | ||||
Donations | 600 | 500 | ||||
Insurance | 4,000 | 870 | ||||
Meals and Entertainment | 2,300 | 2,100 | ||||
Subscriptions | 120 | 120 | ||||
Business Gifts | 790 | 600 | ||||
Telephone | 2,015 | 1,956 | ||||
Training | 1,975 | |||||
Travel | 865 | 750 | ||||
Other | 1,700 | 2,724 | ||||
TOTAL OPERATING EXPENSES | 15,865 | 10,320 | ||||
NET INCOME (LOSS) | ($1,288) | $7,302 |
The bookkeeper provided the following additional information:
- Donations expense is a $600 donation to the Campaign to Re-Elect Senator Ami Dahla.
- Training includes $575 for an educational seminar on bug control. It also includes the cost for Russell to attend an online certificate program in landscaping in order to improve his skills and advertise his designation as a certified landscaper. The tuition, fees, and books cost $1,400. He also drove his personal car 57 miles round trip to Boise to take exams three times for a total of 171 miles.
- No business gift exceeded $22 in value.
- The subscription is for a trade magazine titled Plants Unlimited.
The business uses the cash method of accounting and has no accounts receivable or inventory held for resale.
In addition to the above expenses, the Longs have set aside one room of their house as a home office. The room is 160 square feet and their house has a total of 1,600 square feet. They pay $13,200 per year rental on their house, and the utilities amount to $1,800 for the year.
The Longs also have the following interest income for the year from corporate bonds:
|
The Longs have two dependent children, Bill (Social Security number 123-23-7654) and Martha (Social Security number 345-67-8654). Both Bill and Martha are full-time high school students, ages 17 and 18, respectively, and each can be claimed for the $500 other dependent credit. Russell's Social Security number is 664-98-5678 and Linda's is 554-98-3946. They made an estimated tax payment to the IRS of $300 on December 31, 2020. The Longs received a $2,400 EIP in 2020.
Required:
COMPLETE THE LONGS TAX RETURN INCLUDING FORM 1040, SCHEDULES 1, B & C AND FORM 8829. PLEASE FILL OUT ALL FORMS.
Assume the taxpayers had full-year health coverage and neither taxpayer wants to contribute to the presidential election campaign.
- If required, enter a "loss" as a negative number on the tax form. Do not enter deductions or other amounts as negative numbers.
- If an amount box does not require an entry or the answer is zero, enter "0".
- Do not round any division. If required, round your final answers to the nearest dollar.
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