Fall, 2019 Term Project: Tax Return Preparation Jerry & Roberta Smith - 2018 Tax Return Information Family members and Dependents: The following is a list of information for Jerry & Roberta Smith for the tax year 2018 Jary & Robata are married and have three children Andrew, George, and Terry. They live at 345 Main Street, Manhasset, N.Y. 11425. Jerry is an attorney and he is self-employed in his own law firm: Smith Legal Consultancy in Manhasset, NY. Roberta is a Professor (PHD) in Chemistry at C.W. Post College in Brookville, NY 2018 Tax Information regarding the Smith's and their dependents'are as follows: Name Social Security Age Other Facts No. Jerry - Husband 111-11-1111 5 4 Lawyer and Self Employed. Professor of Chemistry at C. W. Post Roberta - Wife 224-32-2888 48 College Full-time student at Cornell University. Andrew is very good student and he Andrew (Son) 246-56-7788 21 camed $125,000 in royalties from patents related to his science inventions and research projects. Attends Public School in Manhasset, George (son) 456-78-8956 12 N.Y. He lives at home with Mom & Dad. Terry (daughter) 666-66-6666 24 Harriet Adams (Roberta's mother) 777-77-7777 82 Terry attends Columbia University Grad School. Terry is married to Robert Jones and is supported by him. The Smith's regularly contribute to Terry & Robert's support Retired NYC Teacher and Roberta's Mother. She received $25,000 from her NYC Pension in 2018. The Smith's contributed over 50% of her support. She lives in New York City in her own apartment. Jerry's Uncle. He lives in NYC by himself. He receives 55% of his support from Jerry & Roberta. He earned $4,200 in 2018 from a part-time job. Jerry's ex-wife. See note below. Jerry's cousin. He earned $3,000 of income from part-time work. He lived with the Smith family and was supported by them for the entire year. Edward James (Jerry's Uncle) 888-88-8888 57 Tracy Smith 999-99-9999 4 7 Sid Roth 100-00-0000 1 9 Term Project: Tax Return Preparation Dependents: Assume that all other requirements are met by each potential dependent. Jerry's Previous Marriage: Jerry is obligated to pay Alimony and Child Support as stated in the divorce decree to his ex-wife, Tracy Smith. He is required to make monthly payments of $650 and $500 respectively, for Child Support and Alimony. During 2018, Jerry made total payments of $12,500 to Tracy. Jerry and Tracy both agreed that the outstanding balance will be paid by 12/31/18. 7.800 et dedret The Smiths's W-2 information is as follows: 4.700 Atimony Jerry Roberta Gross wages -0- 110,000 Federal Withholding Taxes 25,000 NYS Withholding Taxes 15,000 NYC Withholding Taxes 10,000 Interest and Dividends earned by the Smiths' and reported on Form 1099's are as follows: Types of Interest / Dividends Interest on 3.75% 20 year US Treasury Bonds Interest on NYS 4% General Obligation Bonds Interest on N.J.3.75% State Dormitory Bonds Interest on CD -Chase Bank Interest - GE 4.65% 20 year bonds Ordinary & Qualified Dividend Income - Per Fidelity Statement Amounts 5,500 9,500 5,500 4.000 7,200 12,000 Roberta received a "Debt Forgiveness" from Master Card company in the amount of $5,000; this concerned a prior charge from 2016 which has now been forgiven. Estimated Tax Payments: Mr & Mrs. Smith made estimated tax payments as follows: Federal: $ 35,000 Total paid. NYS: $10,000 Total Paid (NYS all Paid in by 12/31/18) Fall, 2019 Term Project: Tax Return Preparation Jerry is Self Employed in his own private law practice (JSmith Legal Consultancy, where he specializes in Personal Injury law. EIN: 55-5687541, Business code: 541110. Accounting method: (Cash Basis), located at 400 Greenwich St. New York, NY 10007. The Revenue and Expenses from his law practice are as follows: 580,000 Gross Revenue Salary Expense - Professionals Rent-(Tribecca Office) Office Salaries Office Supplies Advertisement Utilities Telephone /Internet Accounting Fees Health Insurance-Employees Office Maintenance Office Equipment (see Note 1) Travel (see Note 2) Miscellaneous Anti-Trust Damages (see Note 3) 75.000 70.000 55.000 11.000 9.000 8000 3,000 12,000 15.000 5000 50,000 6,000 1,500 90,000 --Note 1 - The category office equipment, includes poigters, computers, fax machines, percolators, phones, microwave, and office refrigerator. is unfamiliar with the tax treatment and therefore requires your help. He is greatly concern with the tax benefits available for the costs incurred for office equipment. (Hint: Should he capitalized and depreciate the equipment cost, or is there another more beneficial tax treatment?) -Note 2 - Jerry visited Miami on a legal conference that was specific to his business. He spent a total of three days in Miami. However the conference was only for two days, but since Jerry loved the beach and the warm weather, he decided to stay another day. The total travel expenses incurred on the trip were $6,000. Note 3 - Jerry Smith, Attorney, was sued by the US government, regarding a criminal violation of the U.S. Antitrust Laws. He entered a no-contest plea and paid the "Treble Antitrust Damage Fine" of $90,000 to settle the case. Can he deduct the whole fas, co? Fall, 2019 Term Project: Tax Return Preparation Unreimbursed Job Related Expenses Roberta attended a Research Conference at Harvard University during 2018. Her employer's practice is to reimburse their employees up to $2,000 per conference. Her total expenses incurred were 3,000 however, she was only reimbursed 2,000 as of December 31, 2018. Group Term Life Insurance C.W. Post College provided $70,000 of group term life insurance to Roberta, who is not considered a key employee. (Hint: Don't forget to consider its effect on gross income). Retirement Contributions During 2018, Jerry Smith contributed 6.500 to his Traditional IRA and Roberta contributed $6.500 to her Roth IRA. NYS Tax Refund Mr. & Mrs. Smith received a 1099 for $17,000 representing a 2017 NYS Tax Refund which was received in 2018. The Jones's itemized their deductions in 2017. Xs the round tarable? Capital Transactions Jerry sold the following securities during 2018: Company Shares Date sold Gain/Loss IBM BA GE AAPL 2,000 1,000 1.000 1,000 Selling Price 140,000 28.000 50.000 150,000 12/01/18 06/12/18 05/08/18 11/15/18 Date Acquired 02/15/13 02/21/87 06/15/17 | 12/07/17 Cost / Tax Basis 200,000 75,000 30,000 95,000 Sale of Principal Residence (see Note 4) Date of sale 11/01/18 Date Acquired 07/06/96 Selling Price $1,400,000 Adj. Basis 900,000 Exp of sale 34,000 Commission 66,000 Smith Note 4 - Sale of Residence: Mr. & Mrs. lived in this house for many years. It was acquired in 1996 at a cost of $500,000 and it was their principal residence. Over the years they made major improvements to their home and all capital improvements are documented Mr. & Mrs. wish to avail themselves of the $500.000 gain exclusion under IRC Sec 121. Smith Term Project: Tax Return Preparation NO - Not Deswerble Itemized Deductions - Medical Medical Insurance premiums Long Term Care Insurance Nike Exercise Machine (see Note 5) Doctor visits to MD's, & DDS, Prescription Drugs Travel Expenses (see Note 6) Vitamins & Herbs for Mr. & Mrs. Smith Visits to local Gypsies and Fortune-Tellers (Mrs. Smith) Medical Insurance reimbursements $14,000 10,000 ($5,000 H & $5,000 W) 6,000 20,000 8,000 3,250 6,500 15,200 12,500 Note 5 - Medical Expense: Jerry has weak muscles in his lower back. His personal physician prescribed a Nike Exercise Machine to try to alleviate the pain in his lower back. Deduktor nors Note 6 - Travel Expenses: During Spring Break, Mrs. Smith took a trip to Miami after being diagnosed by her medical doctor with extreme stress and fatigue. She hopes that the warm weather will alleviate the stress and fatigue. Me or nots Not LAc ole Vacation / stress Taxes Paid NYS & NYC Income Taxes See W-2 information NYS Sales Taxes on purchase of Boat & Personal Living expenses $15,200 Real Estate Taxes 14,000 Personal Property Taxes (A NYS Personal Property Tax on Michael's Boat (Based on the weight of the boat.) 10,000 Interest Expense Interest on Home Mortgage Points on home mortgage Mortgage Insurance Premiums $20,000 6,000 4,500 Charitable Contributions Cash contributions to recognized public charities Prior year carry forward charitable contributions $25,000 5,000 Donations of Property: Paintings & Sculpture: (see Note 7) Cost $ 22,000 - FMV Appraisal 30,000 Note 7 - Contribution of Property: The painting and sculpture were appraised by a reputable company. Robert believes that the estimated FMV should be $70,000 and not $30,000 as declared by the appraisal company. Term Project: Tax Return Preparation Other Expenses Gambling losses (see Note 8) $44,000 Note 8 - Gambling Losses: Mr. Smith enjoys gambling and he considers himself to be a Doctor of the Craps Table". During 2018 Jerry won $14,000 and incurred losses of $58,000. Dis net pambling losses amounted to $44.000. After his summer 2018 winning streak, he has been constantly losing! Conhe deduct the loses Note 9- Child & Dependent Care Expenses and Child Care Credit: The Jones's want to Claim "Child & Dependent Care Eyre d ib Child Care Credit. During 2018 the Smiths spent $8,000 on Child Care expenses for their son George. Fease compute the amount of Child Caravnenses allowed and Child Tax Credit allowed. Note 10 - Education Credits: The Smith's spent $65,000 for tuition at Cornell University and $20,000 for Campus Housing Mr. Smith would like to take advantage of the Education Credits available for his son Andrew. Note 11 - Sale of Tribeca Apartment. I condominium apartment in Tribeca for $175,00 Jerry's Mother needed a new place to live in $100,000. Jerry decided that he could use the loss thereafter, Jerry purchased another condon Deca Apartment. In 2012, Jerry Smith purchased a two bedroom Tribeca for $175,000 in order to be close to work. In 2018, place to live in NYC and Jerry sold her the apartment for the could use the loss to reduce his taxable income. Shortly d another condominium nearby, in the new tower on Murray Street. helata pouty Sell REQUIRED: 1) Prepare the following Tax Forms , Schedules, Worksheets and Notes for Mr. & Mrs. Smith For The Tax Year 2018: 1. Form 1040 2. Schedule A 3. Schedule B 4. Schedule C 5. Form SE- Seir Employed (Jerty) 6. Schedule D and Form 8949 7. Tax Computation Worksheet for Dividends & Capital Gains 8) Any other worksheet or summary schedule that may be Term Project: Tax Return Preparation applicable. 9) As Page #1, of your solution, Prepare a Summary schedule of your Tax findings. Use the following categories: - The Personal Exemption has been suspended for 2018- 2025. How many of the people listed, would qualify as Taxpayer's Dependent? - Gross Income, animal o tous n o s -Sch C-Net Income (Loss) 1991 o ro ni baduz - Deductions for AGI, V zloupe bassi n s - Adjusted Gross Income (AGI) - Itemized Deductions or Standard Deduction, - Taxable Income, - Tax Liability - Tax Due or Amount of Refund. amo 10) Comment on The Tax Treatment for each of the ELEVEN NOTES in the Project. For each Note in the project, (starting with Dependents and Family Members) you must write a short explanation as to your tax treatment, explaining why you handled it the way that you did. Fall, 2019 Term Project: Tax Return Preparation Jerry & Roberta Smith - 2018 Tax Return Information Family members and Dependents: The following is a list of information for Jerry & Roberta Smith for the tax year 2018 Jary & Robata are married and have three children Andrew, George, and Terry. They live at 345 Main Street, Manhasset, N.Y. 11425. Jerry is an attorney and he is self-employed in his own law firm: Smith Legal Consultancy in Manhasset, NY. Roberta is a Professor (PHD) in Chemistry at C.W. Post College in Brookville, NY 2018 Tax Information regarding the Smith's and their dependents'are as follows: Name Social Security Age Other Facts No. Jerry - Husband 111-11-1111 5 4 Lawyer and Self Employed. Professor of Chemistry at C. W. Post Roberta - Wife 224-32-2888 48 College Full-time student at Cornell University. Andrew is very good student and he Andrew (Son) 246-56-7788 21 camed $125,000 in royalties from patents related to his science inventions and research projects. Attends Public School in Manhasset, George (son) 456-78-8956 12 N.Y. He lives at home with Mom & Dad. Terry (daughter) 666-66-6666 24 Harriet Adams (Roberta's mother) 777-77-7777 82 Terry attends Columbia University Grad School. Terry is married to Robert Jones and is supported by him. The Smith's regularly contribute to Terry & Robert's support Retired NYC Teacher and Roberta's Mother. She received $25,000 from her NYC Pension in 2018. The Smith's contributed over 50% of her support. She lives in New York City in her own apartment. Jerry's Uncle. He lives in NYC by himself. He receives 55% of his support from Jerry & Roberta. He earned $4,200 in 2018 from a part-time job. Jerry's ex-wife. See note below. Jerry's cousin. He earned $3,000 of income from part-time work. He lived with the Smith family and was supported by them for the entire year. Edward James (Jerry's Uncle) 888-88-8888 57 Tracy Smith 999-99-9999 4 7 Sid Roth 100-00-0000 1 9 Term Project: Tax Return Preparation Dependents: Assume that all other requirements are met by each potential dependent. Jerry's Previous Marriage: Jerry is obligated to pay Alimony and Child Support as stated in the divorce decree to his ex-wife, Tracy Smith. He is required to make monthly payments of $650 and $500 respectively, for Child Support and Alimony. During 2018, Jerry made total payments of $12,500 to Tracy. Jerry and Tracy both agreed that the outstanding balance will be paid by 12/31/18. 7.800 et dedret The Smiths's W-2 information is as follows: 4.700 Atimony Jerry Roberta Gross wages -0- 110,000 Federal Withholding Taxes 25,000 NYS Withholding Taxes 15,000 NYC Withholding Taxes 10,000 Interest and Dividends earned by the Smiths' and reported on Form 1099's are as follows: Types of Interest / Dividends Interest on 3.75% 20 year US Treasury Bonds Interest on NYS 4% General Obligation Bonds Interest on N.J.3.75% State Dormitory Bonds Interest on CD -Chase Bank Interest - GE 4.65% 20 year bonds Ordinary & Qualified Dividend Income - Per Fidelity Statement Amounts 5,500 9,500 5,500 4.000 7,200 12,000 Roberta received a "Debt Forgiveness" from Master Card company in the amount of $5,000; this concerned a prior charge from 2016 which has now been forgiven. Estimated Tax Payments: Mr & Mrs. Smith made estimated tax payments as follows: Federal: $ 35,000 Total paid. NYS: $10,000 Total Paid (NYS all Paid in by 12/31/18) Fall, 2019 Term Project: Tax Return Preparation Jerry is Self Employed in his own private law practice (JSmith Legal Consultancy, where he specializes in Personal Injury law. EIN: 55-5687541, Business code: 541110. Accounting method: (Cash Basis), located at 400 Greenwich St. New York, NY 10007. The Revenue and Expenses from his law practice are as follows: 580,000 Gross Revenue Salary Expense - Professionals Rent-(Tribecca Office) Office Salaries Office Supplies Advertisement Utilities Telephone /Internet Accounting Fees Health Insurance-Employees Office Maintenance Office Equipment (see Note 1) Travel (see Note 2) Miscellaneous Anti-Trust Damages (see Note 3) 75.000 70.000 55.000 11.000 9.000 8000 3,000 12,000 15.000 5000 50,000 6,000 1,500 90,000 --Note 1 - The category office equipment, includes poigters, computers, fax machines, percolators, phones, microwave, and office refrigerator. is unfamiliar with the tax treatment and therefore requires your help. He is greatly concern with the tax benefits available for the costs incurred for office equipment. (Hint: Should he capitalized and depreciate the equipment cost, or is there another more beneficial tax treatment?) -Note 2 - Jerry visited Miami on a legal conference that was specific to his business. He spent a total of three days in Miami. However the conference was only for two days, but since Jerry loved the beach and the warm weather, he decided to stay another day. The total travel expenses incurred on the trip were $6,000. Note 3 - Jerry Smith, Attorney, was sued by the US government, regarding a criminal violation of the U.S. Antitrust Laws. He entered a no-contest plea and paid the "Treble Antitrust Damage Fine" of $90,000 to settle the case. Can he deduct the whole fas, co? Fall, 2019 Term Project: Tax Return Preparation Unreimbursed Job Related Expenses Roberta attended a Research Conference at Harvard University during 2018. Her employer's practice is to reimburse their employees up to $2,000 per conference. Her total expenses incurred were 3,000 however, she was only reimbursed 2,000 as of December 31, 2018. Group Term Life Insurance C.W. Post College provided $70,000 of group term life insurance to Roberta, who is not considered a key employee. (Hint: Don't forget to consider its effect on gross income). Retirement Contributions During 2018, Jerry Smith contributed 6.500 to his Traditional IRA and Roberta contributed $6.500 to her Roth IRA. NYS Tax Refund Mr. & Mrs. Smith received a 1099 for $17,000 representing a 2017 NYS Tax Refund which was received in 2018. The Jones's itemized their deductions in 2017. Xs the round tarable? Capital Transactions Jerry sold the following securities during 2018: Company Shares Date sold Gain/Loss IBM BA GE AAPL 2,000 1,000 1.000 1,000 Selling Price 140,000 28.000 50.000 150,000 12/01/18 06/12/18 05/08/18 11/15/18 Date Acquired 02/15/13 02/21/87 06/15/17 | 12/07/17 Cost / Tax Basis 200,000 75,000 30,000 95,000 Sale of Principal Residence (see Note 4) Date of sale 11/01/18 Date Acquired 07/06/96 Selling Price $1,400,000 Adj. Basis 900,000 Exp of sale 34,000 Commission 66,000 Smith Note 4 - Sale of Residence: Mr. & Mrs. lived in this house for many years. It was acquired in 1996 at a cost of $500,000 and it was their principal residence. Over the years they made major improvements to their home and all capital improvements are documented Mr. & Mrs. wish to avail themselves of the $500.000 gain exclusion under IRC Sec 121. Smith Term Project: Tax Return Preparation NO - Not Deswerble Itemized Deductions - Medical Medical Insurance premiums Long Term Care Insurance Nike Exercise Machine (see Note 5) Doctor visits to MD's, & DDS, Prescription Drugs Travel Expenses (see Note 6) Vitamins & Herbs for Mr. & Mrs. Smith Visits to local Gypsies and Fortune-Tellers (Mrs. Smith) Medical Insurance reimbursements $14,000 10,000 ($5,000 H & $5,000 W) 6,000 20,000 8,000 3,250 6,500 15,200 12,500 Note 5 - Medical Expense: Jerry has weak muscles in his lower back. His personal physician prescribed a Nike Exercise Machine to try to alleviate the pain in his lower back. Deduktor nors Note 6 - Travel Expenses: During Spring Break, Mrs. Smith took a trip to Miami after being diagnosed by her medical doctor with extreme stress and fatigue. She hopes that the warm weather will alleviate the stress and fatigue. Me or nots Not LAc ole Vacation / stress Taxes Paid NYS & NYC Income Taxes See W-2 information NYS Sales Taxes on purchase of Boat & Personal Living expenses $15,200 Real Estate Taxes 14,000 Personal Property Taxes (A NYS Personal Property Tax on Michael's Boat (Based on the weight of the boat.) 10,000 Interest Expense Interest on Home Mortgage Points on home mortgage Mortgage Insurance Premiums $20,000 6,000 4,500 Charitable Contributions Cash contributions to recognized public charities Prior year carry forward charitable contributions $25,000 5,000 Donations of Property: Paintings & Sculpture: (see Note 7) Cost $ 22,000 - FMV Appraisal 30,000 Note 7 - Contribution of Property: The painting and sculpture were appraised by a reputable company. Robert believes that the estimated FMV should be $70,000 and not $30,000 as declared by the appraisal company. Term Project: Tax Return Preparation Other Expenses Gambling losses (see Note 8) $44,000 Note 8 - Gambling Losses: Mr. Smith enjoys gambling and he considers himself to be a Doctor of the Craps Table". During 2018 Jerry won $14,000 and incurred losses of $58,000. Dis net pambling losses amounted to $44.000. After his summer 2018 winning streak, he has been constantly losing! Conhe deduct the loses Note 9- Child & Dependent Care Expenses and Child Care Credit: The Jones's want to Claim "Child & Dependent Care Eyre d ib Child Care Credit. During 2018 the Smiths spent $8,000 on Child Care expenses for their son George. Fease compute the amount of Child Caravnenses allowed and Child Tax Credit allowed. Note 10 - Education Credits: The Smith's spent $65,000 for tuition at Cornell University and $20,000 for Campus Housing Mr. Smith would like to take advantage of the Education Credits available for his son Andrew. Note 11 - Sale of Tribeca Apartment. I condominium apartment in Tribeca for $175,00 Jerry's Mother needed a new place to live in $100,000. Jerry decided that he could use the loss thereafter, Jerry purchased another condon Deca Apartment. In 2012, Jerry Smith purchased a two bedroom Tribeca for $175,000 in order to be close to work. In 2018, place to live in NYC and Jerry sold her the apartment for the could use the loss to reduce his taxable income. Shortly d another condominium nearby, in the new tower on Murray Street. helata pouty Sell REQUIRED: 1) Prepare the following Tax Forms , Schedules, Worksheets and Notes for Mr. & Mrs. Smith For The Tax Year 2018: 1. Form 1040 2. Schedule A 3. Schedule B 4. Schedule C 5. Form SE- Seir Employed (Jerty) 6. Schedule D and Form 8949 7. Tax Computation Worksheet for Dividends & Capital Gains 8) Any other worksheet or summary schedule that may be Term Project: Tax Return Preparation applicable. 9) As Page #1, of your solution, Prepare a Summary schedule of your Tax findings. Use the following categories: - The Personal Exemption has been suspended for 2018- 2025. How many of the people listed, would qualify as Taxpayer's Dependent? - Gross Income, animal o tous n o s -Sch C-Net Income (Loss) 1991 o ro ni baduz - Deductions for AGI, V zloupe bassi n s - Adjusted Gross Income (AGI) - Itemized Deductions or Standard Deduction, - Taxable Income, - Tax Liability - Tax Due or Amount of Refund. amo 10) Comment on The Tax Treatment for each of the ELEVEN NOTES in the Project. For each Note in the project, (starting with Dependents and Family Members) you must write a short explanation as to your tax treatment, explaining why you handled it the way that you did