I need help with this project by June 07. No software should be used.

Davenport University Federal Taxation I ACCT 315/715 Instructor: Darlena L. Billops-Hill TAXRETURN PROBLEM *********************************************************** REQUIREMENT Prepare the Federal Income Tax return for Tom and Renee Houghton for the year ended 2014 *********************************************************** Tom and Renee Houghton are married and file a joint return. Tom was born on 3/17/1959 and Renee was born on 6/19/1963. Tom owns a used book store (self-employed, Sch. C), and Renee is a college professor. Tom's Social Security number is 354-69-2250, and Renee's is 448-392985. The Houghtons live at 455 Traverse St, Grand Rapids, MI 49508. Their phone number is: 616-871-5621. The Houghtons each designate that $3 is to go to the Presidential Election Campaign Fund. Tom has one son, Dirk (SS# 307-50-4861; BD 08/04/1991), from a previous marriage. Dirk is age 23 and a full-time law student at Cooley Law School. He worked part-time during the year earning $3,590, which he spent for his own support. In addition, he received a $4,500 scholarship from Cooley Law School. Dirk lived at home while not in school and Tom and Renee provided $5,800 toward Dirk's support. They also provided over half the support of Renee's daughter, Amanda (SS# 306-15-8012, BD 05/20/1995), from a previous marriage. Amanda is age 19 and a full- time student at Davenport University. Amanda worked part-time during the year, earning $2,800. She filed a joint return with her husband Roger, who earned $10,700 during the year. Tom and Renee also have twins, Amelia (SS 386-45-2189; BD 02/18/2004) and Amy (SS 386-452190), age ten, who live with them. Tom's mother, Mabel, (SS# 101-52-1317), was born on 8/26/1930. Mabel is disabled and lives with the Houghtons. The Houghtons pay $3,800 per year for dependent care expenses for Mabel, so they can both be employed. The dependent care provider is Senior Care, 1492 Columbus St, Grand Rapids, MI, 49503 (EIN# 38-6451321). In addition, Tom and his brother John each incurred out-of-pocket costs of $3,950 for Mabel's support. Also, Tom provided lodging for Mabel during the entire year. Tom estimates the fair rental value of the lodging is ACCT 315/715 -FALL 15 Page 1 of 8 $5,800. Mabel received $8,900 in Social Security Benefits and $1,250 of interest during the year, all of which she put in the bank. John is willing to do whatever is necessary to enable Tom to claim Mabel as a dependent. Renee is a professor at Grand Rapids Community College (#38-7854123; 143 Bostwick NE Grand Rapids, MI 49503), where she earned $ 89,000. GRCC withheld Federal income tax of $11,250, state income tax of $3,487, Grand Rapids city income tax of $765, and the correct amount of FICA. Her employer pays for health care for the entire family except for Amanda who bought healthcare in the marketplace and has received a form 1095-A. The Houghton's received $3,900 of interest from Michigan Savings Bank on a joint account. They received interest of $1,850 on City of Denver bonds they bought in January. Tom received a dividend of $820 on General Bicycle Corporation stock he owns. Renee received a dividend of $1,575 on Acme Clothing Corporation stock she owns. General Bicycle and Acme Clothing are both domestic Corporations. Tom and Renee received a dividend of $981 on jointly owned stock in Maple Leaf Brewing Company, a Canadian corporation. All of the securities were held with a Grand Rapids brokerage firm and are \"qualified dividends\". In July, a severe storm came through the area and did considerable damage to the summer home (382 Dutchman, Holland, MI 49423) that they had purchased for $107,000 two years earlier. Fair market value before the storm on the building was $129,000 and was valued at $65,000 after the storm. Insurance recovery was $45,000. Tom's business, Tom's Bargain Books, is located at 645 3rd Ave., Grand Rapids, MI. 49503, and his employer identification number is #38-6478224. Tom's sales for the year were $243,157. He uses the cash method of accounting for tax purposes and his business expenses on the cash basis are as follows: Advertising Bank service charges Professional dues Professional journals Contributions to employee benefit plans Insurance on office contents Accounting services Miscellaneous office expense Store and equipment rental Utilities and telephone Wages Payroll taxes Purchases Beginning Inventory Ending Inventory ACCT 315/715 -FALL 15 $ 2,600 $ 185 $ 400 $ 360 $ 7,800 $ 1,780 $ 3,640 $ 346 $38,000 $ 3,850 $38,450 $ 2,417 $45,000 $87,300 $71,300 Page 2 of 8 Tom put 16,736 business miles on his truck this year and 12,916 personal miles (total miles= 29,652). He uses the automatic mileage method. Tom purchased the truck July 14, 2011 and did not take any Sec 179 immediate expensing. He does keep written records of his mileage. June 8, 2014 Tom purchased a new business computer information system to track inventory and customers, etc., the cost was $6,500. On the same date he spent $18,500 for furniture to refurbish his office. He did elect Sec.179 immediate expensing, for these items. Renee's mother, Diane, died on July 2, 2002, leaving Renee her entire estate. Included in the estate was Diane's residence at 1562 Harbor Dr., Holland, MI 49424. Diane's basis in the residence was $25,000. Fair market value of the residence on July 2, 2002 was $115,000 (this is Renee's basis). Renee began renting the house January 1, 2003. In 2014 the house was rented the entire year at $1,400 a month. The house is depreciated using the MACRS straight-line method for residential real estate with zero salvage value. In computing depreciation, they allocate a value of $29,000 to the lot on which the house is located. They incurred the following expenses during the year on the rental property: Property insurance..................... $1,300 Property taxes......................... 4,200 Maintenance............................ 1,700 Management fees......................... 1,500 The Houghtons sold 1,000 shares of Capp Corp stock they had received as a wedding present on June 25, 2000. The stock was worth $40 per share in January. By September 3, its value had dropped to $27 per share, and the Houghtons sold the stock on that date. They had been given the stock by Tom's father, who had paid $9 per share for it in 1972. Its value at the date of gift was $17.50 per share. No gift tax was paid on the gift. (The Houghton's basis would be $9 per share.) On December 30, 2014 as he was leaving the grocery store, Tom found a Michigan lottery ticket someone had apparently dropped. On January 4, 2015 when the lottery held its weekly drawing, Tom discovered he had won $24,000, which he received on January 7. Renee is required by her employer to visit several high schools in the Holland-Muskegon area to evaluate GRCC students who are doing their medical rotations. She also spent $367 on meals taking out the students afterwards to discuss how the rotations were progressing. She is not reimbursed by GRCC for the expenses she incurs in doing this. During the year, she drove her personal automobile 9,200 miles in fulfilling this obligation. Renee purchased her car in April of 2012, and put a total of 25,600 miles on it in 2014. All other miles driven were personal. Renee did not keep detailed records of her gas and oil purchases and had no major repairs on the car this year. She does journal her business mileage. Since Renee must travel out of town, the Houghtons take their twins, Amelia and Amy to daycare. Their daycare provider is Betty Bop Babies at 324 Carbona St, Grand Rapids, MI 49508. The EIN number is #38-2546946. The Houghtons received a receipt for $5,642 in daycare costs for 2014. The cost was evenly divided for the care for the twins. ACCT 315/715 -FALL 15 Page 3 of 8 Tom contributed $8,500 to Self-Employed SEP Plan on December 30. Renee is covered by a GRCC retirement plan. Tom and Renee have given you a file containing the following receipts for expenditures during the year: Medicines and drugs Doctors and hospital bills Penalty for underpayment of last year's state income tax Real estate taxes on personal residence Michigan vehicle registration fees State sales tax on new furniture State sales tax on new sailboat Interest on Home mortgage (paid to Home Bank) Interest on credit cards Cash contributions to Hope Church Payroll deductions for Renee's contribution to the United Way Professional dues (Renee) Professional subscriptions (Renee) Fee for preparation of last year's 1040 $ 686 $ 4,348 $ 412 $ 7,962 $ 396 $ 410 $ 290 $ 9,650 $ 535 $ 8,600 $ 400 $ 390 $ 275 $ 850 On the 15th of January, April, June and September the Houghton's made quarterly estimated Federal income tax payments of $ 1,800 ($7,200 total payments). They made estimated payments for state income tax of $1,000 for the year. All Michigan estimated payments were made in 2014. 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