INDIVIDUAL TAX RETURN PROBLEM 5 Required - Use the following information so complete Armando and Louedes Goezales's missing, use reasonable 2017 federal income tax return If any information is assumptions to fall in the gaps. You may nood the following forms and shedules to complete the project Fom 1040 Schodule A, Schedule B. Schodule C Schodule D. Schodele E. Schoduke SE Form 4562 (for the dental practice), Form 4562 (for the rental property. Form 4797, Form 8863, and Form 8949. The forms, schedules, and inaructioes can be found at the IRS wbsite (www.ins pow). The instructions can be helpful in completing the forms Facts 1. Armando Z and Lourdes K.Goerales are married and file a joinm return. Armando is self-employed as a dentist, and Lourdes is a college peofessor. Armando and Loudes have throe children. The oldest is Ricanda, who lives at home. Ricardo is a lawr student at the University of Cincinnati and worked part time during the year, carning $1.500 which he spent for his own suppoet Armando and Lourdes provided $6.000 soward Ricardo's support (including $4,000 for Ricardo's fall tuition). They also peovided over half the support o their daughter, Sclena who is a full-time student at Edgeclift College in Cincint Selena worked pat time as an independent contractor during the year, earning $3,200. Selena lived at home until she was married in December 017 She filed a joint return with her hushand. Tony, who earned $20,000 during the year Felige is the youngest and lived in the Gonrales's home for the entire year. The Gonzaleses peovide you with the following additional information Armando and Lourdes would like to take advantage on their scturn of any educa tional expenses paid for their children The Gomraleses do not want to coatribuse to the presidential eloction campaip The Gomraleses live at 621 Franklin Avenue, Cincinnati, Ohio 45211 Armando's birthday is 5/1959 and his Social Security mumber is 333-45-6666 Loundes's birthday is 4/24/1962 and her Social Security number is 566-77-8888 Ricardo's birthday is 11/61994 and his Social Security mumber is 576-18-7928 Selena's birthday is 2/1/1998 and her Social Security number is 575-92-4321 Felipe's birthday is 12/12/2008 and his Social Security number is 613-97-8465 - The Gonraleses do not have any foecign bank accounts or trusts Loundes is a lecturer at Xavier Univensity in Cinscinnati, where she earned $30,.000 The university withheld federal income tax of $3,375, state income tas of 5900 Cincinnati city income tax of $375, S1.860 of Social Security tax, and $435 of Medicare tax. She aho worked part of the year for Delta Airlines Delta paid her $100000 in salary, and withheld federal income tax of S1,125, state income tas of 5300, Cincinnati city income tax of $125. Social Security tax of 5630, and Me care tax of $145 3. The Gonealeses received $800 of interest from State Savings Bank on a joint a- coumt. They received isteress of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a lean from Third National Bank of Cincinnati.They C-B Appendix C paid interest of $1,100 on the loan Armando received a dividend of $540 on General Bicycle Corporation stock he owns. Lourdes received a dividend of $390 on Acme Clothing Corporation stock she owns. Armando and Lourdes receiveda dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2017 are qualified dividends 4. Armando practices under the name "Armando Z. Gonzales, DDS His business is located at 645 West Avenac,Cincinnat, Oie 45211, and his employer ide fication number is O1-2222222 Armando's pross receipts during the year were 111,000 Armando unes the cash method of accounting for his business. Armandeos business expenses are as Sollows S 1200 Contributions to employee henefit plans Malpractice insurance Fine for overbilling State of Ohio for work 2O00 ,200 performed on welfare patient Intcrest on moncy bornowed to refiurbish office Dental supplies Ueilitics and telephon Payroll taxes ln June, Amando decided to urbish his office. This project was completed and the assets placed in service on Jaly 1Armando's expenditures inclued 58,000 for new ofice furnitue 560000 for mew dental oqsipment (seven-year reoovery period) and S2000 for a new coeputct Armundo elected to compute his cost recovery al- lowance ng MACRS Ne did noi clNt to use $129 immediate expening, and he chose to not claim any homus daprociation Lourdes's mother, Maria, died on July 22012 leawing Loardes her entire estate Incladed in the estate was Maria's eidence (325 Ouk Stroet, Cincinnati, Ohio 45211L Maria's hasis in the residence was 530.000. The fair market value of the residence on July 25012was $15500 The property was distributed to Lourdes on January 1,2013. The Genraleses huve held the property as rental property and have managed it themeles From 2013 until June 0 2017,they rented the house to the same tcnant. The senant was taferred to a branch office in California and moved oun at the end of ne Since they did no want to bother finding a new ant Armando and Lourdes sold the house on June 30 2017, They roceived 140,000 for the house and land ($15.000 for the land and $125,000 for the housel less a 6 pencent commiin ched by the broker They had depreciated the house using the MACRS rales and coevestices applicable to residential real estale. To compute depreciation on the house, the Gonzaleses had allocated S15,000 of the property's hasis to the land onwbch the house is localed. The Gonraleses coloctod rem of $1.000 a meh daring the six monds the hone was occupied during the year. They incurred the owing neld espenses during this period 5. Property insurance Property tases Deprociation (to he comguiod 6. The Gonzaleses sold 200 shares of Capp Coeporation saock on September 3, 2017, for $42 a share (mines a $50 commissioel. The Gonzaleses received the stock from Armando's father on Jane 25, 19S1, as a wedlding present. Armando's father originally parchased the stock for S10 per share on January 1, 1969 The stock was valued at $14.50 per share on the daie of the gift. No gift tax was paid on the gift 7.Armando and Lourdes have given you a file og the ollowing receipts fo expenditures during the year Prescription medicine and drugs (nct of insurance neinbunement) Doctor and hospital bills (nct of insurance nembunemen Penalty for underpayment of last year's stake income ta Real estate tases on pernsonal residence Interest on home mortgage (paid to Home Stale Savings& Loan Inmerest on credit cards (consumer purchases) Cah contribution to St. Manthew's chu Paynoll doductions for Lourdes's contributions to the id Way 376 762 The Gonzaleses filed their 2016 federal, s and locall neturms on April 12, 3017 They paid the following additional 2016tases with ther federal income tases of S630, stale income tases of $250, and city income tases of $75 The Gonzaleses made timely ctimated fodral income tax quarter during 2017. Thcy aho made estimatiend sule income tax payments of 5300 cach quarter and estimated city income tax pyments of $160 each quarter. The Gonraleses made all fourth-quarter payments on December 31, 2017. They would 9. ments of SI500 cach a refund for 10. Armando and Loundes have qualifying insurance for purpoes of the Aftondable Care Act (ACA) . Evaluates results: As a tax preparer, what would you recommend this client to do next year based on the options identified? (Please do not say that the client should be more organized, or keep better documentation, or anything along those lines. In at least three sentences, use the text and knowledge gathered over the semester to put together a solid recommendation to this tax client. Think through some different strategies related to various types of income and deductions. Remember, you are their tax preparer, and the taxpayers are trusting you as an advisor.) INDIVIDUAL TAX RETURN PROBLEM 5 Required - Use the following information so complete Armando and Louedes Goezales's missing, use reasonable 2017 federal income tax return If any information is assumptions to fall in the gaps. You may nood the following forms and shedules to complete the project Fom 1040 Schodule A, Schedule B. Schodule C Schodule D. Schodele E. Schoduke SE Form 4562 (for the dental practice), Form 4562 (for the rental property. Form 4797, Form 8863, and Form 8949. The forms, schedules, and inaructioes can be found at the IRS wbsite (www.ins pow). The instructions can be helpful in completing the forms Facts 1. Armando Z and Lourdes K.Goerales are married and file a joinm return. Armando is self-employed as a dentist, and Lourdes is a college peofessor. Armando and Loudes have throe children. The oldest is Ricanda, who lives at home. Ricardo is a lawr student at the University of Cincinnati and worked part time during the year, carning $1.500 which he spent for his own suppoet Armando and Lourdes provided $6.000 soward Ricardo's support (including $4,000 for Ricardo's fall tuition). They also peovided over half the support o their daughter, Sclena who is a full-time student at Edgeclift College in Cincint Selena worked pat time as an independent contractor during the year, earning $3,200. Selena lived at home until she was married in December 017 She filed a joint return with her hushand. Tony, who earned $20,000 during the year Felige is the youngest and lived in the Gonrales's home for the entire year. The Gonzaleses peovide you with the following additional information Armando and Lourdes would like to take advantage on their scturn of any educa tional expenses paid for their children The Gomraleses do not want to coatribuse to the presidential eloction campaip The Gomraleses live at 621 Franklin Avenue, Cincinnati, Ohio 45211 Armando's birthday is 5/1959 and his Social Security mumber is 333-45-6666 Loundes's birthday is 4/24/1962 and her Social Security number is 566-77-8888 Ricardo's birthday is 11/61994 and his Social Security mumber is 576-18-7928 Selena's birthday is 2/1/1998 and her Social Security number is 575-92-4321 Felipe's birthday is 12/12/2008 and his Social Security number is 613-97-8465 - The Gonraleses do not have any foecign bank accounts or trusts Loundes is a lecturer at Xavier Univensity in Cinscinnati, where she earned $30,.000 The university withheld federal income tax of $3,375, state income tas of 5900 Cincinnati city income tax of $375, S1.860 of Social Security tax, and $435 of Medicare tax. She aho worked part of the year for Delta Airlines Delta paid her $100000 in salary, and withheld federal income tax of S1,125, state income tas of 5300, Cincinnati city income tax of $125. Social Security tax of 5630, and Me care tax of $145 3. The Gonealeses received $800 of interest from State Savings Bank on a joint a- coumt. They received isteress of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a lean from Third National Bank of Cincinnati.They C-B Appendix C paid interest of $1,100 on the loan Armando received a dividend of $540 on General Bicycle Corporation stock he owns. Lourdes received a dividend of $390 on Acme Clothing Corporation stock she owns. Armando and Lourdes receiveda dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2017 are qualified dividends 4. Armando practices under the name "Armando Z. Gonzales, DDS His business is located at 645 West Avenac,Cincinnat, Oie 45211, and his employer ide fication number is O1-2222222 Armando's pross receipts during the year were 111,000 Armando unes the cash method of accounting for his business. Armandeos business expenses are as Sollows S 1200 Contributions to employee henefit plans Malpractice insurance Fine for overbilling State of Ohio for work 2O00 ,200 performed on welfare patient Intcrest on moncy bornowed to refiurbish office Dental supplies Ueilitics and telephon Payroll taxes ln June, Amando decided to urbish his office. This project was completed and the assets placed in service on Jaly 1Armando's expenditures inclued 58,000 for new ofice furnitue 560000 for mew dental oqsipment (seven-year reoovery period) and S2000 for a new coeputct Armundo elected to compute his cost recovery al- lowance ng MACRS Ne did noi clNt to use $129 immediate expening, and he chose to not claim any homus daprociation Lourdes's mother, Maria, died on July 22012 leawing Loardes her entire estate Incladed in the estate was Maria's eidence (325 Ouk Stroet, Cincinnati, Ohio 45211L Maria's hasis in the residence was 530.000. The fair market value of the residence on July 25012was $15500 The property was distributed to Lourdes on January 1,2013. The Genraleses huve held the property as rental property and have managed it themeles From 2013 until June 0 2017,they rented the house to the same tcnant. The senant was taferred to a branch office in California and moved oun at the end of ne Since they did no want to bother finding a new ant Armando and Lourdes sold the house on June 30 2017, They roceived 140,000 for the house and land ($15.000 for the land and $125,000 for the housel less a 6 pencent commiin ched by the broker They had depreciated the house using the MACRS rales and coevestices applicable to residential real estale. To compute depreciation on the house, the Gonzaleses had allocated S15,000 of the property's hasis to the land onwbch the house is localed. The Gonraleses coloctod rem of $1.000 a meh daring the six monds the hone was occupied during the year. They incurred the owing neld espenses during this period 5. Property insurance Property tases Deprociation (to he comguiod 6. The Gonzaleses sold 200 shares of Capp Coeporation saock on September 3, 2017, for $42 a share (mines a $50 commissioel. The Gonzaleses received the stock from Armando's father on Jane 25, 19S1, as a wedlding present. Armando's father originally parchased the stock for S10 per share on January 1, 1969 The stock was valued at $14.50 per share on the daie of the gift. No gift tax was paid on the gift 7.Armando and Lourdes have given you a file og the ollowing receipts fo expenditures during the year Prescription medicine and drugs (nct of insurance neinbunement) Doctor and hospital bills (nct of insurance nembunemen Penalty for underpayment of last year's stake income ta Real estate tases on pernsonal residence Interest on home mortgage (paid to Home Stale Savings& Loan Inmerest on credit cards (consumer purchases) Cah contribution to St. Manthew's chu Paynoll doductions for Lourdes's contributions to the id Way 376 762 The Gonzaleses filed their 2016 federal, s and locall neturms on April 12, 3017 They paid the following additional 2016tases with ther federal income tases of S630, stale income tases of $250, and city income tases of $75 The Gonzaleses made timely ctimated fodral income tax quarter during 2017. Thcy aho made estimatiend sule income tax payments of 5300 cach quarter and estimated city income tax pyments of $160 each quarter. The Gonraleses made all fourth-quarter payments on December 31, 2017. They would 9. ments of SI500 cach a refund for 10. Armando and Loundes have qualifying insurance for purpoes of the Aftondable Care Act (ACA) . Evaluates results: As a tax preparer, what would you recommend this client to do next year based on the options identified? (Please do not say that the client should be more organized, or keep better documentation, or anything along those lines. In at least three sentences, use the text and knowledge gathered over the semester to put together a solid recommendation to this tax client. Think through some different strategies related to various types of income and deductions. Remember, you are their tax preparer, and the taxpayers are trusting you as an advisor.)