INCOMETAXRETURN PROBLEM Jacqueline Lutz, SS # 079-83-1982, date of birth June 18, 1972, is a selfemployed mergers a acquisitions consultant. She uses the accrual method of accounting. Her principal business code number is 541990 . Her business address is 370 Lexington Avenue, New York, N.Y., 10021. Her home address is 11167th avenue, New York, 10011. During the year, she had the following business income and expenses: Note: Report the professional fees on lines 1, 3, 5, and 7 on Schedule C and report the expenses on the appropriate lines (8 through 27 ) on Schedule C. You will also report the profit on Schedule 1 (attached), Line 12. a - Meais and Entertainment are only 50% deductible. Input 1005 in the tax program, and 50% will automatically be calculated and reflected on Line 240 . b - Mineage is deductible at a rate of 57.5 cents (\$0.575) per mile. Multiply the totat mileage by $0.575 and input the fotal on Line 24a OTHER NOTABLEITEMS Jacqueline received dividends from Mobil, Inc. of $365, British Petroleum, Inc, of $480, and Texaco Corp. of $472. She also recelved interest from her Capital One bank account in the amount of $1,771. Please note, the dividends are ordinary, however, they are NOT qualified dividends. These items are reported on Schedule B. Her home secures a $625,000 mortgage. Jacqueline paid $6,533 in mortgage interest. Report this amount on lines 8a,8e and 10 of Schedule A. Jacqueline gave $8,263 to Harvard Law School, and $6,337 to Brown University, her alma maters. She also donated $1,779 to the ASPCA. Report the combined total on lines 11 and 14 of Schedule A. She incurred $26,024 of out-of-pocket medical expenses during the year, which included her health insurance premiums. Report the full amount of line 1 , the deductible amount should be reflected on line 4 of Schedule A. She made quarterly estimated federal tax payments during the year of $13,540 per quarter. (\$13,540* 4=$54.160) Report this amount on Form 1040, Line 26. She paid quarterly estimated state and local income tax payments of $10.076 per quarter. She also paid $3,720 in real estate taxes on her home during the year (Schedule A, Line 5b). Report the properly deductible amount on lines 5-7 of Schedule A. Remember the combined deductible amount for state \& local taxes is limited to $10,000. Jacqueline is not married and has no dependents. REQUIRED: Prepare Jacqueline's 2021 Federal Income Tax Return. You will need the following schedules: 1) Form 1040 2) Schedule A 3) Schedule B 4) Schedule C 5) Schedule SE Hint To prepare this return MANUALLY you MUST follow this sequence: Step1: Prepare Schedule C - Transfer profit to lines 3 and 9 of Schedule 1 and Line 1c of Form 8995. Step 2: If Schedule C shows a profit, prepare Schedule SE. Step 3: Transfer the amount on Line 12 of Schedule SE to Lines 4 and 10 of Schedule 2, and also Line 23 of Form 1040. Step 4: Transfer the amount on Line 13 of Schedule SE to Lines 14 and 22 of Schedule 1, and Line10a and 10c of Form 1040. Step 5: Then prepare form 8995 , transfer Line 15 to Form 1040 Line 13 Step 6: Then prepare Schedule B. Step 6: Then prepare Form 1040 up to line 11. Step 7: Then prepare Schedule A to determine whether your client should Itemize or take the standard deduction. Step 8: After claiming the correct deduction (itemized or standard) amount, complete Form 1040
