I need help with this, is attached as a document. Please take a look and explain it to me thanksp
FEDERAL TAX I Fall 2016 Tax project Individual Income Tax Return ASSIGNMENT INSTRUCTIONS: 1. Prepare the 2015 (Married filing Joint) Federal Individual Income tax return for George & Louise Jefferson based on the information supplied in the attached case. [DO NOT PREPARE TAX RETURNS FOR ANY DEPENDENTS] 2. You may use tax software OR you may manually prepare the return using the correct IRS forms for 2015. Warning: If you use software, you are still responsible for the accuracy of the return!! SEE # 4 below............ Manual forms and instructions are available for download at www.irs.gov. I have posted the following tax forms to Blackboard, along with IRS line by line instructions: A. B. C. D. E. Form 1040 (page 1 & 2) Schedule A - Itemized Deductions Schedule B - Interest and Ordinary Dividends Schedule C - Profit and Loss From Business Schedule D - Capital Gains and Losses - No need to prepare form 8949, instead: F. G. H. I. Include a separate spreadsheet for short term gains and losses and report the totals on line 3 of schedule D. Include a separate spreadsheet for long term gains and losses and report the totals on line 10 of schedule D. Schedule E- Rent & Royalty Income Schedule SE - Self Employment Tax Form 8959 - Additional Medicare Tax Form 8960 - Net Investment Income Tax 2. I suggest you go through all of the information in item by item detail. Apply the tax rules you have learned for each ITEM stated. Once you have decided how to treat each item of income, exclusion, deduction, and credit, then proceed to preparing the returns. 3. If you decide to use software, please note, you are still responsible for the accuracy of the return. If something is keypunched incorrectly, or if you input the information in the wrong place, or if you use the wrong version of the software, the error is still your responsibility. This is not an assignment on how to use turbo tax, or any other tax software, it is an assignment to prepare a complete and accurate income tax return. Page 1 of 6 4. Your completed assignment will be a hard copy (nothing by e-mail please) of the completed tax return. 5. The due date for this project is Friday December 2, 2016 at the beginning of class (NO EXTENSIONS). 6. Finally and CRITICAL. This is not a class-wide group project. You must only work with your teammate. I will be available during office hours and I will field questions at the end of class concerning this assignment. Please do not wait until the last minute if you have questions. Each team is expected to do their own work and submit their own original tax return. YOU MUST INCLUDE THE FOLLOWING STAPLED TO THE FRONT OF YOUR ASSIGNMENT: Name(s) - please print: ______________________ Tax project due 12/2/16 Attestation: We pledge, on my honor, that I have neither received nor given any unauthorized assistance on this assignment. I understand there are SEVERE penalties for noncompliance. Signed:_______________________ Dated:__________________ Signed:_______________________ Dated:__________________ This assignment is worth 30 points towards the 400 point semester total or 7.5% of your final grade. I include this as part of your class for a number of reasons. Not only as a practical Page 2 of 6 assignment to apply what we have learned to a \"real world\" application, but I have found it to be one of the more memorable items that former students remember from the class. Good luck & have some fun with this. From the information provided below, prepare a 2015 Federal Income tax return for George & Louise Jefferson. The client is married and file a joint tax return. READ THE DETAILED INSTRUCTIONS ON THE PREVIOUS PAGES! Personal Information: Taxpayer: George Jefferson Spouse: Age 65 Age: Occupation: Self employed Occupation: Address: 1 Anywhere Road, Anytown, NJ Louise Jefferson 56 Part time worker The Jefferson's have no children of their own, but they provide over 50% support for the following individuals: Edith Jefferson John Andrews Charles Jefferson $ Mother of George, age 87. Lives with George & Louise. Edith has $ 4,750 in 2015 gross income. Louise's Uncle, age 79. John does not live with George and Louise. John has 2015 gross income of $ 3,000. Nephew of Louise, High School student, age 18. Living with the Jefferson's ever sense Charles's mother died in 2010. Charles has 2015 gross income of 6,000. EARNED INCOME FOR GEORGE & LOUISE: George Jefferson (self employed): Owner of: Jefferson's Cleaners 12 George Street New Brunswick, NJ 08901 George uses the Cash Method of accounting in his cleaning business. The following information pertains to George's 2015 \"Cash Basis\" business records: Income Information - Income for cleaning services: Amount received in 2015 for 2014 services Amount received in 2015 for 2015 services Amount received in 2016 for 2015 services $ 62,000 256,000 42,000 Expenses: Page 3 of 6 Advertizing Rent on cleaning shop Office Supplies Business Insurance Wages paid to employees Payroll tax expense Business meals and entertainment $ 4,000 28,000 2,100 8,000(a) 52,000 3,450 2,600 Fines paid to township for dumping cleaning materials Accounting fees Health Insurance paid for employees Self Employed Health Insurance premiums paid for George & Louise (not employees) 2,500 5,600 18,000 14,500 (a) 2 insurance policies, $ 8,000 paid in 2016: Policy A - paid $ 4,000 om 2/28/15 (policy period 3/1/15 - 2/28/16) Policy B - paid $ 4,000 on 12/24/15 (policy period 1/5/16 - 7/5/16) Louise Jefferson: School teacher at a Non-profit organization: Received form W-2 from Brunswick Charter School (no health insurance or retirement benefits are provided to Louise): Taxable Wages Federal Withholding tax Social Security tax withheld Medicare tax withheld NJ Withholding tax $ 90,000 24,000 5,580 1,302 2,500 INVESTMENT INCOME FOR George & Louise: Interest income: Wells Fargo Bank Brunswick Credit Union US Treasury Note Middlesex County Municipal Bond Dividend Income: Exxon Corp (qualified) Microsoft (qualified) Esper Intl. (not qualified) $ 16,950 9,160 1,700 2,750 $ 800 2,580 2,000 Rental Income: George & Louise own a building that is rented out to a wholesale business. The building is fully depreciated. The location of the building is 2215 Route 1, North Brunswick, NJ 08902 The Jefferson's are cash method taxpayers. Page 4 of 6 2013 Income and expense activity pertaining to the rental property is as follows: Rental Income from Tenant Rental Income from CBS (Billboard on Lawn) Rental income from Verizon (cell tower On building roof) Expenses: Real estate taxes Property Maintenance Insurance Legal Fees Management fee paid to property Management company Total expenses $ 140,000 26,000 57,500 $ 68,500 8,000 5,900 4,500 9,800 $ 96,700 2015 PROPERTY TRANSACTIONS: 1. On 1/18/15 George sold 100 shares of XYZ stock for $ 19,250. He purchased the 100 shares on 8/16/14 for $ 34,400. 2. On 9/13/15, George sold 100 shares of Pfizer for $ 3,450. George purchased these shares on 4/13/14 for $ 3,000. 3. Louise sold 100 shares of J&J Corp. 3/10/15 for $ 12,200. Louise purchased 200 shares of J&J on 7/1/08 for $ 40 per share. After the 3/10/15 sale, Louise still owns 100 shares of ABC. 4. George sold a personal use automobile (BMW) for $ 9,800 on 5/12/15. George received this car as a gift on 3/12/15 from his friend. The car had a fair market value of $ 9,600 as of the day of the gift. George's friend purchased the car for $ 7,200 on 2/3/13. 5. George sold a ring on 5/9/15 for $ 800. George purchased this ring in 2008 for $ 2,000. Other 2015 Income items: 1. George inherited $ 250,000 in July of 2015 from the estate of his father. 2. Louise received $ 200 in fees for attending Jury duty in 2015. 3. In 2015, George found a vintage painting in the attic of his house. It did not belong to the previous owners, and George was granted legal ownership of the painting. The fair market value of the painting is $ 20,000. George and Louise provided you with the following information of possible deductions, credits, etc: George & Louise live in a high-rise apartment. Their 2015 rent was $ 48,000. George and Louise own 2 BMW automobiles. 2015 Interest paid on the auto loans totaled $ 9,800. Page 5 of 6 Cash gifts to qualified charities for 2015 totaled $ 4,000. All receipts are provided. Louise donated used furniture to the Salvation Army on 8/22/15. The furniture cost $ 8,000 in 1998 and was worth $ 475 at the time of the gift. George and Louise funded deductible traditional IRA's to the maximum amount in 2015. Neither was covered by a qualified retirement plan through an employer. George paid 2015 federal estimated tax payments totaling $ 120,000 ($ 30,000 times 4 payments). George paid the following NJ estimated tax payments for 2015: Date paid Amount 4/15/15 $ 800 6/15/15 800 9/15/15 800 1/15/16 800 George also paid $ 900 in NJ income tax on 4/15/15 as a balance due on their 2014 State Income tax return. Page 6 of 6
