INDIVIDUAL TAX RETURN PROBLEM 2

Required:

Use the following information to complete Karl and Ellie Frederickson's 2014 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.

Need 1040 form, schedule A, Form 2106, 4684 and 8283 for year 2014

Facts:

Karl Frederickson is employed as a human resources manager for Toys Unlimited, Inc., and Ellie is a financial planner for her mother's company, Frederickson Investments, Inc., a full service wealth planning firm. They provide the following information:

They both want to contribute to the presidential election campaign.

They live at 9876 Fighting Irish Lane, South Bend, IN.

Karl's birthday is 7/17/1965 and his Social Security number is 555-12-6789.

Ellie's birthday is 9/11/1967 and her Social Security number is 987-65-4321.

Karl or Ellie do not have any foreign bank accounts or trusts.

Karl received a Form W-2 from Toys Unlimited, Inc. that contained the following information:

	Line 1 Wages, tips, other compensation:	$45,000
	Line 2 Federal income tax withheld:	7,500
	Line 3 Social Security wages:	45,000
	Line 4 Social Security tax withheld:	2,790
	Line 5 Medicare wages and tips:	45,000
	Line 6 Medicare tax withheld:	653
	Line 17 State income tax:	2,200

Ellie received a Form W-2 from Frederickson Investments, Inc. that contained the following information:

	Line 1 Wages, tips, other compensation:	$85,000
	Line 2 Federal income tax withheld:	12,500
	Line 3 Social Security wages:	85,000
	Line 4 Social Security tax withheld:	5,270
	Line 5 Medicare wages and tips:	85,000
	Line 6 Medicare tax withheld:	1,233
	Line 17 State income tax:	4,200

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Karl and Ellie incurred the following medical expenses for the year:

	Transportation to Chicago for Karl's cancer treatment:	2,000 miles
	Unreimbursed hospital charges for Karl:	$6,500
	Unreimbursed prescription drug charges for Karl and Ellie:	1,750
	Unreimbursed physician charges for Karl and Ellie:	2,200
	Unreimbursed prescription glasses for Ellie:	150
	Laser hair treatment for Ellie (so that she will no longer need to shave her legs)	2,000

Karl and Ellie paid $12,000 of interest payments on their primary residence (acquisition debt of $225,000). They also paid $1,750 of interest expense on Ellie's car loan and $500 of interest on their Visa card.

Karl and Ellie paid $4,000 of real estate taxes on their home and $1,000 of real estate tax on a vacant lot they purchased with the hope of building their dream home in the future. They also paid $3,000 in sales tax on Ellie's car and other purchases and $1,000 of ad valoreum tax on their cars.

Karl and Ellie made the following contributions this year:

	American Red Cross	$200
	United Way	150
	St. Joseph's Catholic Church	8,000
	Food for the family of Hannah Barbara (a neighbor who suffered a tragic car accident this past year).	225
	Stock transfer to the University of Notre Dame (originally purchased for $1,000 in 2005)	750

Karl incurred $4,000 of unreimbursed meals and entertainment related to his job. Ellie incurred $1,200 of expenses for investment publications, and last year they paid their CPA $500 to prepare their tax return.

The roof on Karl and Ellie's house was severely damaged in a hail storm. They had to replace the roof ($7,500), which unfortunately was not covered by insurance because of their high deductible ($10,000).

Karl won $5,000 in the state lottery. He has been playing the lottery for years ($10 in lottery tickets every week ($520 in total) that he saves to keep track of the numbers he plays).

Karl and Ellie have qualifying insurance for purposes of the affordable care act.

In addition the Professor gave the following check numbers:

1) on page 2 of form 1040, taxable income on line 43 is $92080, amount refunded to you on line 76a is $5267

2) on Schedule A, line 29 should be $35020

3) on form 4684, line 2 and line 9 should be $7500