I am doing tax return project. attachments are the materials professor provide. He wants me to do a current year engagement file (Similar with prior year engagement file).

AC 371 Tax Return Project Fall 2015 Student Handout 1: Instructions and Background Materials 1 Introduction and Background Scott and Kourtney Smith have been clients of Footem and Filem, LLP (F&F) for the past few years. Scott owns a real estate business, Smith Realty, which he operates as a sole proprietorship. Kourtney is an elementary school teacher. The couple has also received investment income in recent years, including royalties from an oil and gas property as well as income from a rental house they purchased in Ruidoso, NM. F&F is a CPA firm that provides tax and assurance services. To ensure quality in all services, the firm has established best practices for staff, seniors, and partners to follow when providing services to both tax and assurance clients. For tax services, the partner conducts a meeting with the client after year-end to collect information about the tax year just ended. The senior accountant performs a preliminary review of information provided by the client (commonly referred to as \"PBC\" materials), and this information is forwarded to a staff accountant for further review and comparison with prior year work papers and tax filings. Next, the staff accountant meets with the senior accountant to ask any preliminary questions about the client and suggest any additional information that might be necessary to request from the client to complete the current year tax return. The senior accountant either answers the staff accountant's questions directly or approves questions to be asked of the client. This best practice was established to ensure that client interactions are always useful and productive. Once the staff accountant has an approved list of questions, he or she must schedule a follow-up meeting with the client to gather additional information. This meeting is an important time for the staff accountant to develop client interaction skills, particularly in conveying technical information in a non-technical manner. The information gleaned from the client meeting allows the staff accountant to complete the tax return, which is then delivered to the senior accountant along with the current year work papers and a carryforward memo detailing key information from the current year. The senior accountant will follow up with the staff accountant for clarification or correction of items in the work papers or the tax return. As a staff accountant for F&F, you are assigned to prepare a personal income tax return and supporting documentation for Mr. and Mrs. Smith for the current tax year (2014 in this case, also labeled \"CY\") in accordance with the firm's best practices described above. You will be provided with prior year (2013 in this case, also labeled \"PY\") work papers and client communications, a copy of last year's tax return, as well as a letter and supporting documents from the client for the current year. To complete the case, you will generate questions based on the initial information provided, meet face-to-face with the client, and roll forward a set of 2013 electronic work papers before submitting a complete 2014 engagement file for senior review. This case requires a heightened level of critical thinking and reinforces both technical and communication skills valued in professional practice. The formulation of questions for the client will allow you to practice discussing technical topics in a non-technical manner and to better understand the required balance between attitudes of client advocacy stressed in professional tax practice and legal requirements for \"good-faith\" tax return reporting. Details about the case assignment are provided below and in the supporting materials. 2 Task 1: Review current and prior year information; begin preparation of the tax return Your first task in this project is to familiarize yourself with the client and begin the preparation of the current year tax return. This will require your review and understanding of several different documents you will receive from your senior, discussed below: Current year PBC manual documents - items prepared by the client for 2014. They consist of a letter Kourtney Smith wrote to describe some of the major events she and her husband experienced this year, various W-2 forms for both Kourtney and Scott, as well as several 1099 forms (1099-B, 1099-DIV, 1099-INT, 1099-MISC, etc.). Each 1099 form provides detail for a specific type of transaction the client experienced during 2014. Current year PBC Excel documents - two documents in an Excel spreadsheet prepared by the client. The first is an income statement for Smith Realty (Scott's company) for 2014. The second document is a listing of the couple's 2014 expenses. It is categorized into personal expenses, expenses for the couple's rental cabin in Ruidoso, and expenses for their oil and gas property. Prior year engagement file - contains a copy of the 2013 income tax return F&F prepared for Scott and Kourtney and manual copies of all work papers used to complete the 2013 engagement. Items are tick marked (a tick mark is a unique symbol indicating that a task has been performed, accompanied by a comment in the work papers to reconcile and/or clarify amounts recorded on PBC documents) and tied within the work papers, and should be traceable to the tax return. Items denoted \"SALY\" (same as last year) in the prior year work papers should be confirmed with the client and/or applicable IRS guidance for the current year. The prior year engagement file also includes a carryforward memo, which lists issues that arose during the 2013 engagement as well as transactions noted by the client that were not taxable or includible (denoted \"N/T\" in the work papers) on the tax return. Use this as a guide in preparing the current year carryforward memo in Task 3B, discussed below. Prior year Excel work papers- electronic work papers used by F&F staff to complete the 2013 engagement. These include a list of questions presented to the client during last year's engagement (including client responses), an annual depreciation schedule, a schedule of itemized deductions to be claimed on Schedule A, a schedule of business income and deductions to be claimed on Schedule C, and a lead sheet tying all calculations in the work papers to the final balances reported on the tax return. You will need to roll forward the 2013 Excel work papers to complete the 2014 tax return, although minor revisions may be necessary to adapt last year's work papers for the current year. This will make efficient use of your time and maintain consistency with last year's engagement. A review of the above listed items should help you get started preparing the 2014 tax return and work papers. It should also help you generate questions about any additional documentation needed or whether certain items that applied in the prior year still apply this year. Please prepare as much of the 2014 tax return and work papers as you can with the information provided and make a list of questions for your senior and/or the client. One member of your team will then need to forward these questions to your senior to begin Task 2. Note that you will only have one opportunity to meet with the client during Task 2, so you need to be extremely thorough in Task 1 as you work your way through the current year return and generate questions. As you prepare this year's return, make sure you have included the following forms and schedules, all of which can be found at www.irs.gov: 3 Form 1040; Schedules A, B, C, D, E, and SE (Section A); Form 2441; Form 4562 (for business and rental property); Form 4684; Form 4797; Form 8829; Form 8949; and Form 8960. Task 2: Meet with Senior and Client The second task for this project is to meet (or email) with the senior accountant to discuss your questions before scheduling a follow-up meeting with the clients, Scott and Kourtney Smith. After completing Task 1, you should contact your senior accountant to ask any questions you might have about the engagement in general, client information that might be missing, and/or clarification of information initially provided in the engagement file. Your senior accountant will answer all questions that he/she can before the client meeting. Any remaining questions for the client must be approved by the senior accountant before the client meeting. You have one opportunity to meet with the client to ask questions. Keep in mind that Scott and Kourtney are very busy, so do not waste their time with unnecessary questions (i.e., any questions not approved by your senior). Remember that you are representing F&F in this meeting, so be sure to smile, greet the client in a respectful way, and keep all interactions professional. Make sure to thank them at the end of the meeting. Task 3A: Prepare the work papers and tax return Your third task is to complete the preparation of the current year work papers and tax return for Scott and Kourtney Smith. As mentioned in Task 1, electronic work papers should be rolled forward from the previous year. Use the prior year engagement file for examples of how your tick marks should look and what documentation should be created for the current year. Once the work papers are complete, they should be printed for your senior to review and organized in a similar fashion to the prior year engagement file. All manual work papers and communications from the client should also be included in the current year file. Along with your work papers, the tax return should be put into the current year engagement file for review by the senior accountant. Please ensure that all numbers tick and tie properly (i.e., tick marked numbers in the work papers should match the tax return where indicated). Task 3B: Prepare a carryforward memo Your final task is to prepare a carryforward memo for the engagement file to assist the staff accountant who prepares next year's tax return for Scott and Kourtney Smith. Refer to last year's carryforward memo for help with formatting and content, and note that two primary goals of the memo are to (1) document items that were particularly challenging and/or unusual compared to the prior year and (2) provide details of any items that were excluded and/or phased out when preparing the current year return. When you have finished this final task, please deliver your carryforward memo, final tax return, and current year work papers to your senior for review. 4 Following is a detailed list of all team and individual deadlines for this project. What is due? When is it due? Is this a team or individual assignment? TEAM (only one person needs to turn this in for each team) Where does it go? Task 1 list of questions for your senior and client. The senior MUST approve your questions before you meet with the client. Task 1 Critical Thinking Questions (see Blackboard) No later than Friday, October 23 at 5:00 pm. No later than Friday, October 23 at 11:59 pm. INDIVIDUAL (each team member must turn in his or her own original work) No later than Friday, November 6 at noon. TEAM (at least one person from each team must meet with the client, but all team members are encouraged to attend) Download the questions from Blackboard and answer them directly in the supplied Microsoft Word document. Save your answers and upload them to TurnItIn using the link provided on Blackboard. Check your submission to make sure your file uploaded correctly. Credit will not be given for late responses for any reason. Meet with your client in Dr. Stinson's office (Alston 331) during one of the following windows: Task 2 meeting with the client. Put all of your questions in a Microsoft Word document and email them to Parks Haley (gphaley@crimson.ua.edu). Tuesday, October 27: 9:30am - noon Wednesday, October 28: 8am - 3pm Monday, November 2: 8am - 11:30am Tuesday, November 3: 9:30am - noon Wednesday, November 4: 8am - 3pm Thursday, November 5: 9:30am - noon Friday, November 6: 8am - noon You do not need to schedule an appointment in advance (these are open office hours), but your client will meet with teams on a first come, first served basis. DO NOT wait until the last minute to meet with your client. Your questions will be finalized at the end of Task 1, so there is no reason to delay the client meeting. No credit will be given if a team fails to see the client before the deadline for any reason. 5 What is due? When is it due? Task 2 Critical Thinking Questions (see Blackboard) No later than Friday, November 6 at 11:59 pm. Task 3A and 3B final tax return, work papers, and carryforward memo. Due at the beginning of class on Tuesday, November 17. No later than Tuesday, November 17 at 11:59 pm. Task 3A and 3B Critical Thinking Questions (see Blackboard) Is this a team or individual assignment? INDIVIDUAL (each team member must turn in his or her own original work) TEAM (only one person needs to turn this in for each team) INDIVIDUAL (each team member must turn in his or her own original work) 6 Where does it go? Download the questions from Blackboard and answer them directly in the supplied Microsoft Word document. Save your answers and upload them to TurnItIn using the link provided on Blackboard. Check your submission to make sure your file uploaded correctly. Credit will not be given for late responses for any reason. Print and organize all of your final documents to turn in at the beginning of class. Your final files should look and be organized in a manner similar to the prior year engagement file on Blackboard. Download the questions from Blackboard and answer them directly in the supplied Microsoft Word document. Save your answers and upload them to TurnItIn using the link provided on Blackboard. Check your submission to make sure your file uploaded correctly. Credit will not be given for late responses for any reason. AC 371 Tax Return Project Fall 2015 Student Handout 2: Current Year PBC Manual Documents PBC Personal Exp - Student Copy Scott & Kourtney Smith 2014 Expenses Personal Expenses Mortgage interest - Primary Residence Real estate tax Insurance Repairs & maintenance Utilities Doctor Hospital Dentist Prescription drugs Over the counter drugs Cosmetic surgery Alimony to Scott's ex-wife Scott's dad's funeral cost Donations: United Way St. Matthew's Church Texas Tech University CPA fee Investment expense Daycare School supplies Goodwill $ $ $ $ $ $ $ $ $ $ $ $ $ 8,000.00 6,950.00 3,800.00 1,250.00 7,600.00 2,100.00 5,050.00 1,265.00 800.00 350.00 8,500.00 9,000.00 5,000.00 $ $ $ $ $ $ $ ??? 1,300.00 4,700.00 3,500.00 2,000.00 450.00 8,950.00 650.00 Supplies purchased for Kourtney's classroom Donated 3 bags of clothes and a sofa Expenses for Ruidoso Cabin Cleaning Fee to property management co. Mortgage interest Property Insurance Property taxes Repairs $ $ $ $ $ $ 750.00 450.00 1,100.00 250.00 2,100.00 2,400.00 Expense for Oil & Gas Property Property tax $ 950.00 PBC 1099-B 1 Student Copy 1a Date of sale or exchange PAYER's name, street address, city , state, ZIP code, and telephone no. 12/15/2014 1b Date of acquisition XYZ Company 123 ABC Drive Indianapolis, IN 46254 2/18/2014 1c Type of gain or loss Short-term Long-term x 2014 Proceeds From Broker and Barter Exchange Transactions Form 1099-B 1d Stock or other symbol 1e Quantity sold 500 (317) 407-2393 2a Stocks, bonds, etc. PAYER's federal identification number RECIPIENT'S identification number 111-22-3333 $ $ RECIPIENT'S name Scott Smith Street address (including apt. no) 5,500.00 3 Cost or other basis x Gross proceeds 2b Gross proceeds less commissions and option premiums Check if loss not allowed based on amount in box 2a 4 Federal income tax withheld Copy A 5,000.00 5 Wash sale loss disallowed 7 Bartering 4646 19th St. City, state, and ZIP code Reported to IRS 6 Check if: a b Noncovered security Basis reported to IRS 8 Description Lubbock, TX 79401 Account number (see instructions) 2nd TIN not. 9 Profit or (loss) realized in 2014 on closed contracts 10 Unrealized profit or (loss) on open contracts - 12/31/2013 13 State 14 State identification no. CUSIP number Form 1099-B For Instructional Purposes only - Not an official tax form 11 Unrealized profit or (loss) on open contracts - 12/31/2014 12 Aggregate profit or (loss) on contracts 15 State tax withheld PBC 1099-B 2 Student Copy 1a Date of sale or exchange PAYER's name, street address, city , state, ZIP code, and telephone no. 11/2/2014 1b Date of acquisition LMN Inc. 2505 Mavis Ct. Louisville, KY 40216 1c Type of gain or loss Short-term Long-term 2014 Proceeds From Broker and Barter Exchange Transactions Form 1099-B 1d Stock or other symbol 1e Quantity sold 1000 (502) 888-2939 2a Stocks, bonds, etc. PAYER's federal identification number RECIPIENT'S identification number 222-33-4444 $ 10,000.00 Reported to IRS Gross proceeds 2b Gross proceeds less commissions and option premiums 3 Cost or other basis 4 Federal income tax withheld 5 Wash sale loss disallowed Check if loss not allowed based on amount in box 2a 6 Check if: Copy A RECIPIENT'S name Kourtney Smith Street address (including apt. no) 7 Bartering 4646 19th St. City, state, and ZIP code a b Noncovered security Basis reported to IRS 8 Description Lubbock, TX 79401 Account number (see instructions) 2nd TIN not. 9 Profit or (loss) realized in 2014 on closed contracts 10 Unrealized profit or (loss) on open contracts - 12/31/2013 13 State 14 State identification no. CUSIP number Form 1099-B For Instructional Purposes only - Not an official tax form 11 Unrealized profit or (loss) on open contracts - 12/31/2014 12 Aggregate profit or (loss) on contracts 15 State tax withheld PBC 1099-DIV 1 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. Acme Clothing Company 355 Looney Ave. Hershey, PA 17033 USA (717) 123-4589 PAYER's federal identification number 1a Total ordinary dividends $ 705.00 1b Qualified dividends $ 705.00 2014 2a Total capital gain distr. Form 1099-DIV 2b Unrecap. Sec. 1250 gain 2c Section 1202 gain 2d Collectibles (28%) gain 3 Nondividend distributions RECIPIENT'S identification number Dividends and Distributions 4 Federal income tax withheld 111-22-3333 RECIPIENT'S name Scott Smith 5 Investment Expenses Street address (including apt. no) 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Cash liquidation distributions 9 Noncash liquidation distributions 10 Exempt-interest dividends 4646 19th St. 11 Specified private activity bond interest dividends City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 Account number (see instructions) Form 1099-DIV For Instructional Purposes only - Not an official tax form 2nd TIN not. 12 State 13 State identification no. 14 State tax withheld Copy A PBC 1099-DIV 2 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. Maple Incorporated 258 Maple Avenue Montpelier, VT 05602 USA (802) 999-8389 PAYER's federal identification number 1a Total ordinary dividends $ 2,300.00 1b Qualified dividends $ 2,300.00 2014 2a Total capital gain distr. Form 1099-DIV 2b Unrecap. Sec. 1250 gain 2c Section 1202 gain 2d Collectibles (28%) gain 3 Nondividend distributions RECIPIENT'S identification number Dividends and Distributions 4 Federal income tax withheld 222-33-4444 RECIPIENT'S name Kourtney Smith 5 Investment Expenses Street address (including apt. no) 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Cash liquidation distributions 9 Noncash liquidation distributions 10 Exempt-interest dividends 4646 19th St. 11 Specified private activity bond interest dividends City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 Account number (see instructions) Form 1099-DIV For Instructional Purposes only - Not an official tax form 2nd TIN not. 12 State 13 State identification no. 14 State tax withheld Copy A PBC 1099-DIV 3 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. Brinker Corporation 6890 Mesa Street Laredo, TX 78040 USA (956) 890-2356 PAYER's federal identification number 1a Total ordinary dividends $ 250.00 1b Qualified dividends $ 250.00 2014 2a Total capital gain distr. Form 1099-DIV 2b Unrecap. Sec. 1250 gain 2c Section 1202 gain 2d Collectibles (28%) gain 3 Nondividend distributions RECIPIENT'S identification number Dividends and Distributions 4 Federal income tax withheld 111-22-3333 RECIPIENT'S name Scott Smith 5 Investment Expenses Street address (including apt. no) 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Cash liquidation distributions 9 Noncash liquidation distributions 10 Exempt-interest dividends 4646 19th St. 11 Specified private activity bond interest dividends City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 Account number (see instructions) Form 1099-DIV For Instructional Purposes only - Not an official tax form 2nd TIN not. 12 State 13 State identification no. 14 State tax withheld Copy A PBC 1099-INT 1 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. First State Bank of Lubbock 2432 Quaker Ave. Lubbock, TX 79409 USA (806) 888-2222 PAYER's federal identification number Payer's RTN (optional) 2014 1 Interest Income $ 927.00 Form Interest Income 1099-INT 2 Early Withdrawal Penalty Copy A RECIPIENT'S identification number 3 Interest on U.S. Savings Bonds and Treas. Obligations 232343 111-22-3333 RECIPIENT'S name $ 850.00 4 Federal income tax withheld 5 Investment expenses 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Tax-exempt interest 9 Specified private activity bond interest Scott Smith Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 Account number (see instructions) Form 1099-INT For Instructional Purposes only - Not an official tax form 2nd TIN not. 10 Tax-exempt bond CUSIP no. 11 State 12 State identification no. 13 State tax withheld PBC 1099-INT 2 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. State Bank of Texas 4890 Cowboy Way Dallas, TX 75001 USA (800) 123-4567 PAYER's federal identification number Payer's RTN (optional) 2014 1 Interest Income $ 2,800.00 Form Interest Income 1099-INT 2 Early Withdrawal Penalty Copy A RECIPIENT'S identification number 3 Interest on U.S. Savings Bonds and Treas. Obligations 222-33-4444 RECIPIENT'S name 4 Federal income tax withheld 5 Investment expenses 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Tax-exempt interest 9 Specified private activity bond interest Kourtney Smith Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 Account number (see instructions) Form 1099-INT For Instructional Purposes only - Not an official tax form 2nd TIN not. 10 Tax-exempt bond CUSIP no. 11 State 12 State identification no. 13 State tax withheld PBC 1099-INT 3 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. City of Lubbock 1234 Main Street Lubbock, TX 79407 USA (806) 458-9890 PAYER's federal identification number Payer's RTN (optional) 2014 1 Interest Income Form Interest Income 1099-INT 2 Early Withdrawal Penalty Copy A RECIPIENT'S identification number 3 Interest on U.S. Savings Bonds and Treas. Obligations 222-33-4444 RECIPIENT'S name 4 Federal income tax withheld 5 Investment expenses 6 Foreign tax paid 7 Foreign country or U.S. possession 8 Tax-exempt interest 9 Specified private activity bond interest Kourtney Smith Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code Lubbock, TX 79401 $ Account number (see instructions) Form 1099-INT For Instructional Purposes only - Not an official tax form 1,346.00 2nd TIN not. 10 Tax-exempt bond CUSIP no. 11 State 12 State identification no. 13 State tax withheld PBC 1099-MISC 1 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. Sam Johnston 200 Mountain Dr Ruidoso, NM 88345 USA (575) 989-0323 PAYER's federal identification number 1 Rents $ 16,000.00 2 Royalties 2014 Miscellaneous Income 3 Other income 5 Fishing boat proceeds 6 Medical and health care payments 7 Nonemployee compensation RECIPIENT'S identification number Form 1099-MISC 4 Federal income tax withheld 8 Substitute payments in lieu of dividends or interest 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale 10 Crop insurance proceeds Copy A 111-22-3333 RECIPIENT'S name Scott Smith Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code 11 Foreign tax paid 15a Section 408A deferrals 15b Section 409A income Form 1099-MISC For Instructional Purposes only - Not an official tax form 12 Foreign country or U.S. possession 13 Excess golden parachute payments Lubbock, TX 79401 Account number (see instructions) 14 Gross proceeds paid to an attorney 16 State tax withheld 17 State/Payer's state no. 18 State income PBC 1099-MISC 2 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. HP Oil Company 2185 Ranger Parkway Arlington, TX 76001 USA (800) 123-4567 PAYER's federal identification number 1 Rents 2014 2 Royalties $ 10,600.00 Miscellaneous Income 3 Other income 5 Fishing boat proceeds 6 Medical and health care payments 7 Nonemployee compensation RECIPIENT'S identification number Form 1099-MISC 4 Federal income tax withheld 8 Substitute payments in lieu of dividends or interest 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale 10 Crop insurance proceeds Copy A 111-22-3333 RECIPIENT'S name Scott Smith Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code 11 Foreign tax paid 15a Section 408A deferrals 15b Section 409A income Form 1099-MISC For Instructional Purposes only - Not an official tax form 12 Foreign country or U.S. possession 13 Excess golden parachute payments Lubbock, TX 79401 Account number (see instructions) 14 Gross proceeds paid to an attorney 16 State tax withheld 17 State/Payer's state no. 18 State income PBC 1099-MISC 3 Student Copy PAYER's name, street address, city or town, province or state, country, ZIP or foreign postal code, and telephone no. First State Bank of Lubbock 2432 Quaker Ave. Lubbock, TX 79409 USA (806) 888-2222 PAYER's federal identification number 1 Rents 2014 2 Royalties Miscellaneous Income 3 Other income 5 Fishing boat proceeds 6 Medical and health care payments 7 Nonemployee compensation RECIPIENT'S identification number Form 1099-MISC 4 Federal income tax withheld 8 Substitute payments in lieu of dividends or interest Copy A 111-22-3333 RECIPIENT'S name Scott Smith $ Street address (including apt. no) 4646 19th St. City or town, province or state, country, and ZIP or foreign postal code 10 Crop insurance proceeds 11 Foreign tax paid 15b Section 409A income Form 1099-MISC For Instructional Purposes only - Not an official tax form 12 Foreign country or U.S. possession 13 Excess golden parachute payments Lubbock, TX 79401 Account number (see instructions) 15a Section 408A deferrals 1,200.00 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale 14 Gross proceeds paid to an attorney 16 State tax withheld 17 State/Payer's state no. 18 State income PBC W-2 1 Student Copy a Employee's social security number 22222 222-33-4444 1 Wages, tips, and other compensation b Employer identification number (EIN) 75-1111111 $ c Employer's name, address, and ZIP code 2 Federal income tax withheld 52,595.00 3 Social security wages $ Lubbock ISD 1628 19th Street Lubbock, TX 79401 52,595.00 5 Medicare wages and tips $ $ 5,259.50 4 Social security tax withheld $ 3,260.89 6 Medicare tax withheld 52,595.00 $ 762.63 7 Social security tips 9 d Control number Last name Suff. 10 Dependent care benefits 11 Nonqualified plans 12a Code e Employee's first name and Initial 8 Allocated tips Statutory Retirement Third-party employee plan sick pay 12c Code 14 Other 12b Code 13 Kourtney Smith 4646 19th St. Lubbock, TX 79401 Code 12d f Employee's address and ZIP code 15 State Employer's state ID number W-2 16 State wages, tips, etc. Wage and Tax Statement Form For Instructional Purposes only - Not an official tax form 17 State income tax 2014 18 Local wages, tips, etc. 19 Local income tax 20 Locality name PBC W-2 2 Student Copy a Employee's social security number 22222 222-33-4444 1 Wages, tips, and other compensation b Employer identification number (EIN) 75-3433434 $ c Employer's name, address, and ZIP code 2 Federal income tax withheld 16,945.00 3 Social security wages $ Kids 'R Smart Tutoring 608 N Brentwood Ave Lubbock, TX 79416 16,945.00 5 Medicare wages and tips $ $ 1,694.50 4 Social security tax withheld $ 1,050.59 6 Medicare tax withheld 16,945.00 $ 245.70 7 Social security tips 9 d Control number Last name Suff. 10 Dependent care benefits 11 Nonqualified plans 12a Code e Employee's first name and Initial 8 Allocated tips Statutory Retirement Third-party employee plan sick pay 12c Code 14 Other 12b Code 13 Kourtney Smith 4646 19th St. Lubbock, TX 79401 Code 12d f Employee's address and ZIP code 15 State Employer's state ID number W-2 16 State wages, tips, etc. Wage and Tax Statement Form For Instructional Purposes only - Not an official tax form 17 State income tax 2014 18 Local wages, tips, etc. 19 Local income tax 20 Locality name Kourtney Smith 4646 19th St. Lubbock, TX 79400 March 21, 2015 Dear CPA, I can't believe that it's tax time again! Hopefully I have sent everything you need. Things have been a little hectic around our house with the new baby and everything. I'm still teaching for Lubbock ISD. I did some tutoring this summer so you will see the new W-2. Around midyear, First State Bank of Lubbock asked Scott to be on their Board of Directors. He receives about $200 per month. The extra income helps, as Scott's ex-wife took him to court in April and managed to get $1,000 per month in alimony. I hope she gets remarried soon (but I feel sorry for the new husband)! I've attached the income statement for Scott's real estate business. Smith Realty is still doing well, but we had a minor setback with the EPA in July over some pollution issues. Scott used the wrong kind of fertilizer when trying to clean up the front yard of a house he was trying to sell, and it contaminated the water table. The EPA fined Smith Realty $10,000, all for a little bit of curb appeal! Scott recorded the fine as a legal expense on his books, but I hope we can at least get some of it back on our taxes. Scott was in a car accident in late October. He was hit by a drunk driver on his way home from work. Luckily he wasn't hurt too bad but it totaled his car and he was in the hospital for two days. The judge ordered the drunk driver to pay us $5,000 for medical expenses (even though insurance covered our out-of-pocket costs for the accident) and $3,500 for the emotional trauma he suffered. Scott still doesn't like getting in the car. The judge also awarded us $10,000 in punitive damages. It was the guy's second DWI in 3 months. We finally sold the Ruidoso cabin. YAY! I thought it would never sell. Sam Johnston, who had already been renting from us, was the buyer. In January, Scott's father passed away. He had a life insurance policy issued by Liberty Mutual with a maturity value of $500,000. Scott was the designated beneficiary of the policy and picked a settlement option of $125,000 annually, payable over five years. We received a check for $125,000 in December. In August, I fell off a desk in my classroom trying to hang decorations. I wasn't able to work for 12 weeks so I went on short-term disability. I received a total of $4,500 of disability benefits. In June, Scott and I went to the Bahamas. It was amazing! We stayed at a fabulous all-inclusive resort that had 7 swimming pools and 10 different restaurants. We went snorkeling, took a sunset cruise and even swam with the dolphins. And the best part was it was free! Scott won the trip for being a top real estate agent. I'll have to show you pictures next time I see you. In March (3/18/14), my grandmother gave me 1,000 shares of LMN Inc. stock for my birthday. I sold the stock in November because we had to buy a new car and wanted the cash to make a down payment. My dad told me that my grandmother purchased the stock in 2003 (7/1/03) for $1 per share, which is crazy because it was worth $9.50 per share when I received it in March. My dad also gave me another $3,000 in cash to help with the new car. I hope everything is going well for you and your family. We need to get together for lunch soon. Please let me know if you have any questions or need any more information. All the best, Kourtney Smith PBC Business - Student Copy Smith Realty Income Statement For the Year Ended December 31, 2014 Revenue 132,600.00 Advertising Insurance - professional Insurance - Health (Scott) Legal fees Office chair Office expense Repair - Office equipment Payroll tax Meals with Clients Cell phone Wages - admin assistant Draw Professional dues Professional journals New computers (2) & printer License renewal Other - Client HOA fines Conference in Denver Registration Hotel Airfare Meals Total Expense 6,100.00 2,300.00 8,200.00 12,300.00 650.00 1,250.00 365.00 4,500.00 2,450.00 2,700.00 51,200.00 57,050.00 725.00 205.00 2,760.00 840.00 1,000.00 2,300.00 1,260.00 1,975.00 600.00 160,730.00 Net Income (28,130.00) AC 371 Tax Return Project Fall 2015 Student Handout 3: Current Year PBC Excel Documents Smith Realty Income Statement For the Year Ended December 31, 2014 Revenue 132,600.00 Advertising Insurance - professional Insurance - Health (Scott) Legal fees Office chair Office expense Repair - Office equipment Payroll tax Meals with Clients Cell phone Wages - admin assistant Draw Professional dues Professional journals New computers (2) & printer License renewal Other - Client HOA fines Conference in Denver Registration Hotel Airfare Meals Total Expense 6,100.00 2,300.00 8,200.00 12,300.00 650.00 1,250.00 365.00 4,500.00 2,450.00 2,700.00 51,200.00 57,050.00 725.00 205.00 2,760.00 840.00 1,000.00 2,300.00 1,260.00 1,975.00 600.00 160,730.00 Net Income (28,130.00) Scott & Kourtney Smith 2014 Expenses Personal Expenses Mortgage interest - Primary Residence Real estate tax Insurance Repairs & maintenance Utilities Doctor Hospital Dentist Prescription drugs Over the counter drugs Cosmetic surgery Alimony to Scott's ex-wife Scott's dad's funeral cost Donations: United Way St. Matthew's Church Texas Tech University CPA fee Investment expense Daycare School supplies Goodwill $ $ $ $ $ $ $ $ $ $ $ $ $ 8,000.00 6,950.00 3,800.00 1,250.00 7,600.00 2,100.00 5,050.00 1,265.00 800.00 350.00 8,500.00 9,000.00 5,000.00 $ $ $ $ $ $ $ ??? 1,300.00 4,700.00 3,500.00 2,000.00 450.00 8,950.00 650.00 Supplies purchased for Kourtney's classroom Donated 3 bags of clothes and a sofa Expenses for Ruidoso Cabin Cleaning Fee to property management co. Mortgage interest Property Insurance Property taxes Repairs $ $ $ $ $ $ 750.00 450.00 1,100.00 250.00 2,100.00 2,400.00 Expense for Oil & Gas Property Property tax $ 950.00 AC 371 Tax Return Project Fall 2015 Student Handout 4: Prior Year Engagement File Form 1040 (99) Department of the TreasuryInternal Revenue Service 2013 U.S. Individual Income Tax Return For the year Jan. 1-Dec. 31, 2013, or other tax year beginning OMB No. 1545-0074 , 2013, ending IRS Use OnlyDo not write or staple in this space. See separate instructions. , 20 Last name Your first name and initial SCOTT Your social security number 111-22-3333 SMITH Last name If a joint return, spouse's first name and initial KOURTNEY Spouse's social security number 222-33-4444 SMITH Apt. no. Home address (number and street). If you have a P.O. box, see instructions. 4646 19TH STREET City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse LUBBOCK TX 79400 Foreign country name Filing Status Check only one box. Exemptions Foreign province/state/county Single Married filing jointly (even if only one had income) Married filing separately. Enter spouse's SSN above and full name here. 1 2 3 b c 4 Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. 5 Qualifying widow(er) with dependent child Yourself. If someone can claim you as a dependent, do not check box 6a . 6a Spouse . Dependents: (1) First name MASON . . . . . . . . . . . (2) Dependent's social security number Last name SMITH . . . . . . . . . . . . . . . . } (4) if child under age 17 qualifying for child tax credit (see instructions) (3) Dependent's relationship to you 333-44-5555 Son Total number of exemptions claimed . . . . . . . . . . . . . . . . . . . . 7 . 8b . . . . . . . . . 8a 48,000. 4,175. . . . . 9a 2,950. Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . 8a b 9a Taxable interest. Attach Schedule B if required . Tax-exempt interest. Do not include on line 8a . Ordinary dividends. Attach Schedule B if required . . . . . . . . 3 . 7 . Add numbers on lines above . 1,000. . . . 2,950. 10 11 Qualified dividends . . . . . . . . . . . 9b Taxable refunds, credits, or offsets of state and local income taxes Alimony received . . . . . . . . . . . . . . . . . . . 10 11 12 13 14 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 12 13 14 15a 16a 17 IRA distributions . 15a b Taxable amount . . . Pensions and annuities 16a b Taxable amount . . . Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 17 Farm income or (loss). Attach Schedule F . Unemployment compensation . . . . Social security benefits 20a 18 19 20b 21 22 Gambling Winnings Other income. List type and amount Combine the amounts in the far right column for lines 7 through 21. This is your total income 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 . 24 25 26 27 28 Moving expenses. Attach Form 3903 . . . . . . Deductible part of self-employment tax. Attach Schedule SE . Self-employed SEP, SIMPLE, and qualified plans . . 26 27 28 29 30 31a Self-employed health insurance deduction Penalty on early withdrawal of savings . . . . . . . . . . Alimony paid b Recipient's SSN IRA deduction . . . . . . . Student loan interest deduction . . Tuition and fees. Attach Form 8917 . 29 30 31a 32 33 34 . . . . . . . . . . . . 32 33 34 35 36 37 Adjusted Gross Income 1 . 18 19 20a If you did not get a W-2, see instructions. 2 Dependents on 6c not entered above d Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions) If more than four dependents, see instructions and check here Income Make sure the SSN(s) above and on line 6c are correct. Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 . . . . . . . . . . . . . Subtract line 36 from line 22. This is your adjusted gross income b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b Taxable amount . . . . . . . . . . . . 21 22 32,535. -3,000. 17,365. 12,000. 114,025. 250. 23 2,299. 8,000. . . . . . . For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. BAA . . . . . 36 37 REV 06/04/14 TTW 10,549. 103,476. Form 1040 (2013) Form 1040 (2013) Tax and Credits Standard Deduction for People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. All others: Single or Married filing separately, $6,100 Married filing jointly or Qualifying widow(er), $12,200 Head of household, $8,950 Other Taxes 38 Amount from line 37 (adjusted gross income) 39a Check if: { . . . . . You were born before January 2, 1949, Spouse was born before January 2, 1949, . . Blind. Blind. . } . . . . . . 38 Total boxes checked 39a If your spouse itemizes on a separate return or you were a dual-status alien, check here 39b 40 41 Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . . . 42 43 Exemptions. If line 38 is $150,000 or less, multiply $3,900 by the number on line 6d. Otherwise, see instructions Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . Form 4972 c Tax (see instructions). Check if any from: a Form(s) 8814 b b 44 45 46 Alternative minimum tax (see instructions). Attach Form 6251 . Add lines 44 and 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 48 Foreign tax credit. Attach Form 1116 if required . 49 50 51 52 53 54 55 Residential energy credits. Attach Form 5695 . . . . 52 3800 b 8801 c Other credits from Form: a 53 Add lines 47 through 53. These are your total credits . . . . . Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- 56 57 Self-employment tax. Attach Schedule SE . . . . Unreported social security and Medicare tax from Form: 58 59a b Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required Household employment taxes from Schedule H . . . . 43 44 45 46 . Credit for child and dependent care expenses. Attach Form 2441 47 48 1,000. . . . . a 4137 . . . . . . . . b . . . . . . . . . . 8919 . . . . . . . . First-time homebuyer credit repayment. Attach Form 5405 if required . . . . Form 8959 b Form 8960 c Instructions; enter code(s) Taxes from: a . . . . . . . 55 56 57 . . . . . . . . . . . 62 63 Federal income tax withheld from Forms W-2 and 1099 . . 2013 estimated tax payments and amount applied from 2012 return If you have a qualifying child, attach Schedule EIC. 64a b Earned income credit (EIC) . . . . . . Nontaxable combat pay election 64b Additional child tax credit. Attach Schedule 8812 . . . . . . . . . American opportunity credit from Form 8863, line 8 . Reserved . . . . . . . . . . . . . Amount paid with request for extension to file . . . . . . . . . . . . . . . . . . . . 58 59a 59b 60 61 65 66 67 68 . . . . 69 Credit for federal tax on fuels. Attach Form 4136 . . . . 70 Credits from Form: a 2439 b Reserved c 8885 d 71 Add lines 62, 63, 64a, and 65 through 71. These are your total payments . Excess social security and tier 1 RRTA tax withheld 73 If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid 74a b d Amount of line 73 you want refunded to you. If Form 8888 is attached, check here . Routing number Checking Savings X X X X X X X X X c Type: Account number X X X X X X X X X X X X X X X X X 4,484. Amount of line 73 you want applied to your 2014 estimated tax 75 Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions Direct deposit? See instructions. 75 76 77 Third Party Designee . . . Phone no. 72 73 16,500. 4,484. 0. 74a 76 Yes. Complete below. No Personal identification number (PIN) Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Paid Preparer Use Only . 77 Estimated tax penalty (see instructions) . . . . . . . Do you want to allow another person to discuss this return with the IRS (see instructions)? Designee's name Sign Here Joint return? See instructions. Keep a copy for your records. 12,016. 6,500. 10,000. 62 63 64a 69 70 71 72 Amount You Owe 1,600. 7,419. 4,597. 54 . . Payments 67 68 9,019. 600. 49 50 51 Add lines 55 through 60. This is your total tax 65 66 22,738. 80,738. 11,700. 69,038. 9,019. 40 41 42 Education credits from Form 8863, line 19 . . . . . Retirement savings contributions credit. Attach Form 8880 Child tax credit. Attach Schedule 8812, if required . . . 60 61 Refund Page 2 103,476. Your signature Date Your occupation Daytime phone number Spouse's signature. If a joint return, both must sign. Date Spouse's occupation REAL ESTATE AGENT If the IRS sent you an Identity Protection PIN, enter it here (see inst.) PTIN Check if self-employed TEACHER Print/Type preparer's name Firm's name Firm's address Preparer's signature Self-Prepared Date Firm's EIN Phone no. REV 06/04/14 TTW Form 1040 (2013) SCHEDULE A (Form 1040) OMB No. 1545-0074 Itemized Deductions Department of the Treasury Internal Revenue Service (99) Information about Schedule A and its separate instructions is at www.irs.gov/schedulea. Attach to Form 1040. Name(s) shown on Form 1040 SCOTT & KOURTNEY SMITH Medical and Dental Expenses Taxes You Paid 1 2 3 4 5 Interest You Paid Note. Your mortgage interest deduction may be limited (see instructions). 111-22-3333 Caution. Do not include expenses reimbursed or paid by others. Medical and dental expenses (see instructions) . . . . . 103,476. Enter amount from Form 1040, line 38 2 Multiply line 2 by 10% (.10). But if either you or your spouse was born before January 2, 1949, multiply line 2 by 7.5% (.075) instead Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . State and local (check only one box): a Income taxes, or . . . . . . . . . . . b General sales taxes Real estate taxes (see instructions) . . . . . . . . . Personal property taxes . . . . . . . . . . . . . Other taxes. List type and amount } 6 7 8 1 3 . 10,348. . . . . . . 6 7 4 0. 9 6,538. 15 6,750. 9,450. 1,138. 5,400. 8 9 Add lines 5 through 8 . . . . . . . . . . . . . . . . 10 Home mortgage interest and points reported to you on Form 1098 10 11 Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 20 Casualty or theft loss(es). Attach Form 4684. (See instructions.) . 3,700. 5 11 12 Points not reported to you on Form 1098. See instructions for special rules . . . . . . . . . . . . . . . . . 12 13 Mortgage insurance premiums (see instructions) . . . . . 13 14 Investment interest. Attach Form 4952 if required. (See instructions.) 14 15 Add lines 10 through 14 . . . . . . . . . . . . . . . Gifts to 16 Gifts by cash or check. If you made any gift of $250 or more, see instructions . . . . . . . . . . . . . . . . 16 Charity 17 Other than by cash or check. If any gift of $250 or more, see If you made a gift and got a instructions. You must attach Form 8283 if over $500 . . . 17 benefit for it, 18 Carryover from prior year . . . . . . . . . . . . 18 see instructions. 19 Add lines 16 through 18 . . . . . . . . . . . . . . . Casualty and Theft Losses 2013 Attachment Sequence No. 07 Your social security number . . . . . . . 6,750. . . . . . . 9,200. 250. . . . . . . 19 . . . . . . 20 Job Expenses 21 Unreimbursed employee expensesjob travel, union dues, and Certain job education, etc. Attach Form 2106 or 2106-EZ if required. Miscellaneous 21 (See instructions.) Excess Educator Expenses Deductions 22 Tax preparation fees . . . . . . . . . . . . . 22 350. 945. 23 Other expensesinvestment, safe deposit box, etc. List type and amount INVESTMENT EXPENSES Other Miscellaneous Deductions 24 25 26 27 28 23 Add lines 21 through 23 . . . . . . . . . . . . 24 103,476. Enter amount from Form 1040, line 38 25 Multiply line 25 by 2% (.02) . . . . . . . . . . . 26 Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . Otherfrom list in instructions. List type and amount 400. 1,695. 2,070. . . . . . 27 0. 28 Total 29 Is Form 1040, line 38, over $150,000? Itemized No. Your deduction is not limited. Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40. Deductions } . Yes. Your deduction may be limited. See the Itemized Deductions Worksheet in the instructions to figure the amount to enter. 30 If you elect to itemize deductions even though they are less than your standard deduction, check here . . . . . . . . . . . . . . . . . . . For Paperwork Reduction Act Notice, see Form 1040 instructions. BAA REV 03/03/14 TTW . 29 22,738. Schedule A (Form 1040) 2013 SCHEDULE B OMB No. 1545-0074 Interest and Ordinary Dividends (Form 1040A or 1040) Attach to Form 1040A or 1040. Department of the Treasury Internal Revenue Service (99) Information about Schedule B (Form 1040A or 1040) and its instructions is at www.irs.gov/scheduleb. Name(s) shown on return SCOTT & KOURTNEY SMITH Part I 1 Interest Part II 111-22-3333 1,550. 2,500. 125. 1 Add the amounts on line 1 . . . . . . . . . . . . . . . . . . Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . 4 Subtract line 3 from line 2. Enter the result here and on Form 1040A, or Form 1040, line 8a . . . . . . . . . . . . . . . . . . . . . . Note. If line 4 is over $1,500, you must complete Part III. List name of payer 5 ACME CLOTHNG COMPANY 2 3 (See instructions on back and the instructions for Form 1040A, or Form 1040, line 9a.) Part III Foreign Accounts and Trusts (See instructions on back.) 4,175. 2 3 4 4,175. Amount 500. 1,700. 750. MAPLE INCORPORATED BRINKER CORPORATION Ordinary Dividends Note. If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. Amount List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see instructions on back and list this interest first. Also, show that buyer's social security number and address FIRST STATE BANK OF LUBBOCK STATE BANK OF TEXAS BROWNSTAKE INC (See instructions on back and the instructions for Form 1040A, or Form 1040, line 8a.) Note. If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 2013 Attachment Sequence No. 08 Your social security number 5 Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 6 1040, line 9a . . . . . . . . . . . . . . . . . . . . . . Note. If line 6 is over $1,500, you must complete Part III. You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. 6 2,950. Yes No At any time during 2013, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . If \"Yes,\" are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), formerly TD F 90-22.1, to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . b If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial account is located 8 During 2013, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If \"Yes,\" you may have to file Form 3520. See instructions on back . . . . . . 7a For Paperwork Reduction Act Notice, see your tax return instructions. BAA REV 03/03/14 TTW Schedule B (Form 1040A or 1040) 2013 SCHEDULE C (Form 1040) Profit or Loss From Business OMB No. 1545-0074 information on Schedule C and its instructions, go to www.irs.gov/schedulec. Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. Name of proprietor Attachment Sequence No. 09 Social security number (SSN) SCOTT SMITH 111-22-3333 B Enter code from instructions Principal business or profession, including product or service (see instructions) A 2013 (Sole Proprietorship) For Department of the Treasury Internal Revenue Service (99) REAL ESTATE 5 3 1 2 1 0 Business name. If no separate business name, leave blank. D Employer ID number (EIN), (see instr.) SMITH REALTY C 7 5 5 5 5 5 5 5 5 E Business address (including suite or room no.) F G H I J City, town or post office, state, and ZIP code HYBRID Cash (2) Accrual (3) Other (specify) Accounting method: (1) Did you \"materially participate\" in the operation of this business during 2013? If \"No,\" see instructions for limit on losses If you started or acquired this business during 2013, check here . . . . . . . . . . . . . . . . . Did you make any payments in 2013 that would require you to file Form(s) 1099? (see instructions) . . . . . . . If "Yes," did you or will you file required Forms 1099? . . . . . . . . . . . . . . . . . . . . Part I 4646 19TH STREET LUBBOCK, TX 79400 . Yes No Yes Yes No No . . Income 2 3 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the \"Statutory employee\" box on that form was checked . . . . . . . . . Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 4 5 6 Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . . . . . . . 4 5 6 120,000. 7 Gross income. Add lines 5 and 6 . . . 7 120,000. 1 Part II Expenses 8 Advertising . 9 Car and truck expenses (see instructions) . . . . . Commissions and fees . 10 . . . . Contract labor (see instructions) Depletion . . . . . Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . . . . 11 12 13 Employee benefit programs (other than on line 19) . . Insurance (other than health) 14 15 8 . . . . . . . . . . . . . . . . . . 1 120,000. 2 3 120,000. Enter expenses for business use of your home only on line 30. 6,500. 18 Office expense (see instructions) 18 1,800. 20a Other business property . . . Repairs and maintenance . . . Supplies (not included in Part III) . 20b 21 22 Taxes and licenses . . . . . Travel, meals, and entertainment: Travel . . . . . . . . . 23 4,300. 24a 3,100. 25 9 10 Deductible meals and entertainment (see instructions) . Utilities . . . . . . . . 24b 25 26 27a b Wages (less employment credits) . Other expenses (from line 48) . . Reserved for future use . . . 26 27a 27b 775. 2,400. 48,000. 2,800. a 11 12 13 Pension and profit-sharing plans . Rent or lease (see instructions): Vehicles, machinery, and equipment 19 20 b 21 22 9,500. 23 24 a 14 15 b 1,500. 19 450. 17 Interest: Mortgage (paid to banks, etc.) Other . . . . . . Legal and professional services 28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . . . . . 28 29 30 Tentative profit or (loss). Subtract line 28 from line 7 . . . . . . . 29 84,075. 35,925. 30 3,390. 31 32,535. 16 a b 16a 16b 17 2,950. . . . . . . . . . Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: Method Worksheet in the instructions to figure the amount to enter on line 30 31 . . . . Use the Simplified . . . . . . . Net profit or (loss). Subtract line 30 from line 29. If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. If a loss, you must go to line 32. 32 If you have a loss, check the box that describes your investment in this activity (see instructions). If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. If you checked 32b, you must attach Form 6198. Your loss may be limited. For Paperwork Reduction Act Notice, see the separate instructions. BAA } } REV 03/03/14 TTW 32a 32b All investment is at risk. Some investment is not at risk. Schedule C (Form 1040) 2013 Page 2 Schedule C (Form 1040) 2013 Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If \"Yes,\" attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . Cost a Lower of cost or market b Other (attach explanation) c 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation . . . Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . 36 37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . 37 38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . 38 39 Other costs . . . . . . . . . . . . . . . . . . . . . . . . . 39 40 Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . 40 41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 41 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 . . . . . . No 35 36 Yes . 42 Part IV . . . Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562. 43 When did you place your vehicle in service for business purposes? (month, day, year) 44 Of the total number of miles you drove your vehicle during 2013, enter the number of miles you used your vehicle for: a Business b Commuting (see instructions) Yes No 45 Was your vehicle available for personal use during off-duty hours? . . . . . . . . . . . . . . 46 Do you (or your spouse) have another vehicle available for personal use?. . . . . . . . . . . . . . Yes No 47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . Yes No If \"Yes,\" is the evidence written? . . . . . . . . . . . . . . . . . . . . Yes No b Part V . . . . . . c Other Other Expenses. List below business expenses not included on lines 8-26 or line 30. PROFESSIONAL DUES 800. PROFESSIONAL JOURNALS 200. CONFERENCE REGISTRATION 48 Total other expenses. Enter here and on line 27a . 1,800. . . . . . . REV 03/03/14 TTW . . . . . . . . . 48 2,800. Schedule C (Form 1040) 2013 SCHEDULE D (Form 1040) Department of the Treasury Internal Revenue Service (99) 2013 Attach to Form 1040 or Form 1040NR. Information about Schedule D and its separate instructions is at www.irs.gov/scheduled. Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10. Name(s) shown on return Attachment Sequence No. 12 Your social security number SCOTT & KOURTNEY SMITH Part I OMB No. 1545-0074 Capital Gains and Losses 111-22-3333 Short-Term Capital Gains and LossesAssets Held One Year or Less See instructions for how to figure the amounts to enter on the lines below. This form may be easier to complete if you round off cents to whole dollars. (d) Proceeds (sales price) (e) Cost (or other basis) (g) Adjustments to gain or loss from Form(s) 8949, Part I, line 2, column (g) (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) 1a Totals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b . 1b Totals for all transactions reported on Form(s) 8949 with Box A checked . . . . . . . . . . . . . 2 Totals for all transactions reported on Form(s) 8949 with Box B checked . . . . . . . . . . . . . 3 Totals for all transactions reported on Form(s) 8949 with Box C checked . . . . . . . . . . . . . 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 . 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any longterm capital gains or losses, go to Part II below. Otherwise, go to Part III on the back . . . . . Part II 4 5 6 ( ) 7 Long-Term Capital Gains and LossesAssets Held More Than One Year See instructions for how to figure the amounts to enter on the lines below. This form may be easier to complete if you round off cents to whole dollars. (d) Proceeds (sales price) (e) Cost (or other basis) (g) (h) Gain or (loss) Adjustments Subtract column (e) to gain or loss from from column (d) and Form(s) 8949, Part II, combine the result with line 2, column (g) column (g) 8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b . 8b Totals for all transactions reported on Form(s) 8949 with 3,000. 10,000. Box D checked . . . . . . . . . . . . . 9 Totals for all transactions reported on Form(s) 8949 with Box E checked . . . . . . . . . . . . . 10 Totals for all transactions reported on Form(s) 8949 with Box F checked . . . . . . . . . . . . . . 11 Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8824 . . . . . . . . . . . . . . . . . . . . . . 11 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 12 13 Capital gain distributions. See the instructions . . . . . . . . . . . . . . . . . . 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . 15 Net long-term capital gain or (loss). Combine lines 8a through 14 in column (h). Then go to Part III on the back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 For Paperwork Reduction Act Notice, see your tax return instructions. BAA REV 03/03/14 TTW -7,000. 14 ( 15 ) -7,000. Schedule D (Form 1040) 2013 Page 2 Schedule D (Form 1040) 2013 Part III 16 Summary Combine lines 7 and 15 and enter the result . . . . . . . . . . . . . . . . . . 16 -7,000. If line 16 is a gain, enter the amount from line 16 on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 17 below. If line 16 is a loss, skip lines 17 through 20 below. Then go to line 21. Also be sure to complete line 22. If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, line 13, or Form 1040NR, line 14. Then go to line 22. 17 Are lines 15 and 16 both gains? Yes. Go to line 18. No. Skip lines 18 through 21, and go to line 22. 18 Enter the amount, if any, from line 7 of the 28% Rate Gain Worksheet in the instructions 18 19 Enter the amount, if any, from line 18 of the Unrecaptured Section 1250 Gain Worksheet in the instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 . . Are lines 18 and 19 both zero or blank? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 44 (or in the instructions for Form 1040NR, line 42). Do not complete lines 21