Comprehensive Problem One

Noah and Joan Arc's Tax Return

Noah and Joan Arc live with their family in Dayton, OH. Noah's Social Security number is 43411-3311. Noah was born on February 22, 1982 and Joan was born on July 1, 1983. Both enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city of Dayton.

1. The Arcs have two children, a son named Billie Bob (Social Security number 598-012345), born on March 21, 2010, and a daughter named Mary Sue (Social Security number 554-33-2411), born on December 3, 2013. 2. Joan and Noah brought a folder of tax documents located below. 3. Noah's pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is "The Arc," and its taxpayer identification number is 95-9876556. Since you handle Noah's bookkeeping, you have printed the income statement from your Quickbooks software. 4. Noah and Joan paid the following amounts during the year (all by check):

Political contributions $ 250 Church donations (for which a written acknowledgment was received) 2,625 Real estate taxes on their home 1,375 Medical co-pays for doctor visits 700

Mortgage interest for purchase of home

See Form 1098 Tax return preparation fees 350 Credit card interest 220 Automobile insurance premiums 600 Uniforms for Joan 125

5. Noah has a long-term capital loss carryover from last year of $2,375. 6. Noah and Joan own rental property located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. The revenue and expenses for the year are as follows:

Rental income $13,800 Insurance 575 Interest expense 6,870 Property taxes 1,000 Miscellaneous expenses 700 Depreciation (the house was acquired in 1992) 3,000

7. All members of the Arc household were covered for the entire year under health care insurance through Joan's employer. 8. The Arcs paid Ohio general sales tax of $976 during the year.

Required: You are to prepare their federal income tax return in good form, signing the return as the preparer. Do not complete an Ohio state income tax return. Make realistic assumptions about any missing data (addresses, etc.) that you may need. The following forms and schedules are required:

Form 1040