INDIVIDUAL TAX RETURN PROBLEM 5 Required Use the following information to complete Paul and Judy Vance's 2011 federal income tax return If information is missing, use reasonable assumptions to fill in the gaps You may need the following forms and schedules to complete the project Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106 EZ, Form 4562 (for the dental practice), Form 4562 (for the rental property), Form 4797, and Form 8863 The forms, schedules, and instructions can be found at the IRS Web site (www irs gov) The instructions can be helpful in completing the forms Page C 7 Facts Paul J and Judy L Vance are married and file a joint return Paul is self employed as a dentist, and Judy is a college professor Paul and Judy have three children The oldest is Vince who lives at home Vince is a law student at the University of Cincinnati and worked part time during the year, earning $1,500, which he spent for his own support Paul and Judy provided $6,000 toward Vince's support (including $4,000 for Vince's fall tuition) They also provided over half the support of their daughter, Joan, who is a full time student at Edgecliff College in Cincinnati Joan worked part time as an independent contractor during the year, earning $3,200 Joan lived at home until she was married in December 2011 She filed a joint return with her husband, Patrick, who earned $20,000 during the year Jennifer is the youngest and lived in the Vances' home for the entire year The Vances provide you with the following additional information Paul and Judy would like to take advantage on their return of any educational expenses paid for their children The Vances do not want to contribute to the presidential election campaign The Vances live at 621 Franklin Avenue, Cincinnati, OH 45211 Paul's birthday is 3 5 1957 and his Social Security number is 333 45 6666 Judy's birthday is 4 24 1960 and her Social Security number is 566 77 8888 Vince's birthday is 11 6 1988 and his Social Security number is 576 18 7928 Joan's birthday is 2 1 1992 and her Social Security number is 575 92 4321 Jennifer's birthday is 12 12 1999 and her Social Security number is 613 97 8465 The Vances do not have any foreign bank accounts or trusts Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000 The university withheld federal income tax of $3,375, state income tax of $900, Cincinnati city income tax of $375, $1,260 of Social Security tax and $435 of Medicare tax She also worked part of the year for Delta Airlines Delta paid her $10,000 in salary, and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $420, and Medicare tax of $145 The Vances received $800 of interest from State Savings Bank on a joint account They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati They paid interest of $1,100 on the loan Paul received a dividend of $540 on General Bicycle Corporation stock he owns Judy received a dividend of $390 on Acme Clothing Corporation stock she owns Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company All of the dividends received in 2011 are qualified dividends Paul practices under the name u201CPaul J Vance, DDS u201D His business is located at 645 West Avenue, Cincinnati, OH 45211, and his employer identification number is 01 2222222 Paul's gross receipts during the year were $111,000 Paul uses the cash method of accounting for his business Paul's business expenses are as follows Advertising $ 1,200 Professional dues 490 Professional journals 360 Contributions to employee benefit plans 2,000 Malpractice insurance 3,200 Fine for overbilling State of Ohio for work performed on welfare patient 5,000 Insurance on office contents 720 Interest on money borrowed to refurbish office 600 Accounting services 2,100 Miscellaneous office expense 388 Office rent 12,000 Dental supplies 7,672 Utilities and telephone 3,360 Wages 30,000 Payroll taxes 2,400

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INDIVIDUAL TAX RETURN PROBLEM 5 Required: Use the following information to complete Paul and Judy Vance's 2011 federal income tax return. If information is missing,

INDIVIDUAL TAX RETURN PROBLEM 5

Required:

Use the following information to complete Paul and Judy Vance's 2011 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
You may need the following forms and schedules to complete the project: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562 (for the rental property), Form 4797, and Form 8863. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.

Page C-7

Facts:

Paul J. and Judy L. Vance are married and file a joint return. Paul is self-employed as a dentist, and Judy is a college professor. Paul and Judy have three children. The oldest is Vince who lives at home. Vince is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Paul and Judy provided $6,000 toward Vince's support (including $4,000 for Vince's fall tuition). They also provided over half the support of their daughter, Joan, who is a full-time student at Edgecliff College in Cincinnati. Joan worked part-time as an independent contractor during the year, earning $3,200. Joan lived at home until she was married in December 2011. She filed a joint return with her husband, Patrick, who earned $20,000 during the year. Jennifer is the youngest and lived in the Vances' home for the entire year. The Vances provide you with the following additional information:
- Paul and Judy would like to take advantage on their return of any educational expenses paid for their children.
- The Vances do not want to contribute to the presidential election campaign.
- The Vances live at 621 Franklin Avenue, Cincinnati, OH 45211.
- Paul's birthday is 3/5/1957 and his Social Security number is 333-45-6666.
- Judy's birthday is 4/24/1960 and her Social Security number is 566-77-8888.
- Vince's birthday is 11/6/1988 and his Social Security number is 576-18-7928.
- Joan's birthday is 2/1/1992 and her Social Security number is 575-92-4321.
- Jennifer's birthday is 12/12/1999 and her Social Security number is 613-97-8465.
- The Vances do not have any foreign bank accounts or trusts.
Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, state income tax of $900, Cincinnati city income tax of $375, $1,260 of Social Security tax and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary, and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $420, and Medicare tax of $145.
The Vances received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $1,100 on the loan. Paul received a dividend of $540 on General Bicycle Corporation stock he owns. Judy received a dividend of $390 on Acme Clothing Corporation stock she owns. Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2011 are qualified dividends.

Paul practices under the name %u201CPaul J. Vance, DDS.%u201D His business is located at 645 West Avenue, Cincinnati, OH 45211, and his employer identification number is 01-2222222. Paul's gross receipts during the year were $111,000. Paul uses the cash method of accounting for his business. Paul's business expenses are as follows:

Advertising	$?1,200
Professional dues	490
Professional journals	360
Contributions to employee benefit plans	2,000
Malpractice insurance	3,200
Fine for overbilling State of Ohio for work performed on welfare patient	5,000
Insurance on office contents	720
Interest on money borrowed to refurbish office	600
Accounting services	2,100
Miscellaneous office expense	388
Office rent	12,000
Dental supplies	7,672
Utilities and telephone	3,360
Wages	30,000
Payroll taxes	2,400