General

John Jones is married with two children. His family consists of his wife Jen Jones and his children James Jones and Jackie Jones.

This case study is mainly surrounding Johns earnings, but Jen also works and receives a salary of $80,000 which SHOULD be included in the overall taxable income calculation and included on Form 1040

James Jones is 12 years old and lives at home. His parents fully provide for him

Jackie Jones is 23 years old full-time student and lives at school. She has a part time job and earns $4,000 a year. Her parents provide for more than 50% of her support.

For this project please use the 2018 tax forms and tax rates

Please also use the 2017 IRC 179 expense rules and 2017 bonus depreciation and MACRS depreciation rules

Corporation X

See below for Sales, expense and transaction information during the year.

John is an employee at Corporation X and get a salary at $50,000

Assume all taxable income at the end of the year is paid out as a dividend. Assume John owns 5% of the company

Ignore the Domestic Production Activities Deduction (DPAD)

Income and deduction items

Sales 3,000,000

COGS 100,000

Salaries 300,000

Transactions

1/1/2018 Machinery new Cost = 1,000,000

1/1/2018 Equipment New Cost = 1,200,000

1/1/2018 Machinery Sold Cost = 500,000

Cumulative Depreciation = 300,000

Sale Proceeds = 250,000

1/1/2018 Equipment Sold Cost = 600,000

Cumulative Depreciation = 300,000

Sale Proceeds = 200,000

1/1/2018 Building Sold Cost = 750,000

Cumulative Depreciation = 400,000

Sale Proceeds = 1,000,000

Requirements

1. Complete Pages 1,3 and supporting Schedules for 2018 Form 1120
2. Calculate the Taxable Income of the corporation and the dividend to be paid

Partnership ABCD

See below for Sales, expense and transaction information during the year.

This is a services-based business John started with his Friends. John owns 25%

John spends 300 hours a year on the business

John receives a guaranteed payment of $10,000 for his services. He is the only partner that receives a GP.

Ignore the Domestic Production Activities Deduction (DPAD) and the 199A deduction

Income and deduction items

Revenue $80,000

Guaranteed Payment $10,000

Meals and Entertainment expense $10,000

Interest income $ 2,000

Requirements

1. Calculate the Taxable Income of the partnership, and Johns portion of the Taxable Income
2. Complete Johns Schedule K-1 to use for his individual return

Individual Return

Mortgage interest paid $18,000

Property tax paid $ 2,500

Charitable contributions $ 1,500

Municipal bond interest earned stock sale $ 500

Basis $ 1,000

Proceeds $ 5,000

Requirements

1. Calculate the Taxable Income of the Jones Family
2. Complete the Jones Form 1040 and supporting schedules