Individual Tax Return Problem Required: Use the following information to complete Paige Turner's 2020 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Facts: 1. Paige Turner is single and has two children from her previous marriage. Ali lives with Paige, and Paige provides more than half of her support. Leif lives with his father, Will (Leif lived with Will for all of 2020). Will provides more than half of Leifs support Paige provides you with the following additional information: She uses the cash method of accounting and a calendar year for reporting. She wishes to contribute to the presidential election campaign. o Paige lives at 523 Essex Street, Bangor, Maine 04401 o Paige's birthday is May 31, 1982. Ali's birthday is October 5, 2011. o Leif's birthday is December 1, 2009. Paige's Social Security number is 007-11-4727. o Ali's Social Security number is 005-11-7232. o Leif's Social Security number is 004-22-3419. o Will's Social Security number is 006-33-6333. She does not have any foreign bank accounts or trusts. 2. Paige is employed as a nuclear engineer with Atom Systems Consultants, Inc. (ASCI). ASCI's federal employer identification number is 79-1234466. Paige's pay stubs indicate that she had $4,230 withheld in federal taxes, and $4,987 in state taxes, as well as the appropriate Social Security and Medicare taxes. ASCI has an extensive fringe benefits program for its employees. 3. Paige earned salary of S70,000 before subtracting her 401(k) and flexible spending plan contributions. She contributed $7,000 to her 401(k) account, and she contributed $2,500 to her flexible spending account. 4. ASCI paid $397 of whole life insurance premiums to cover Paige's personal whole life insurance policy. ASCI also paid health club dues of S900 to a nearby health elu on Paige's behalt 5. Taking advantage of ASCI's educational assistance program, during the fall Paige enrolled in two graduate engineering classes at a local college. ASCI paid her tuition, fees, and other course-related costs of $2,300. 6. Paige received free parking in the company's security garage that would normally cost $200 per month 7. Paige manages the safety program for ASCI. In recognition of her superior handling of three potential crises during the year, Paige was awarded the Employee Safety Award on December 15. The cash award was S500. 8. On January 15, 2020, Paige's father died. From her father's estate, she received stock valued at $30,000 (his basis was $12,000) and her father's house valued at $90,000 (his basis in the house was $55,000). 9. Paige owns several other investments and in February 2021 received a statement from her brokerage firm reporting the interest and dividends earned on the investments for 2020: EXHIBIT A This is important tax information and is being furnished to the Internal Revenue Service. 1099-DIV- Dividends and Distributions Entity Description Amount General Dynamics Ordinary/qualified dividends $300 1099-INT - Interest Entity Description Amount New Jersey Economic Development (bonds) Interest $300 IBM Interest 700 State of Nebraska (bonds) Interest 700 1098 - Mortgage Interest Statement Entity Description Amount Sunbelt Credit Union Mortgage interest 57.100 Northeast Bank Mortgage interest 435 Form K-1 (preliminary) Entity Description Grubstake Mining & Development Corp. Ordinary income $2,000 Distribution 1,000 10. Paige owns 1,000 shares of Grubstake Mining & Development common stock. Grubstake is organized as an Scorporation and has 100,000 shares outstanding (Scorp. ID number 45-4567890). Grubstake reported taxable income of $200,000 and paid a distribution of $1.00 per share during the current year. Paige tells you that Grubstake typically does not send out its K-1 reports until late April. However, its preliminary report (see Exhibit A) has been consistent with the K-I for many years. Paige does not materially participate in Grubstake's activities. 11. Paige slipped on a wet spot in front of a computer store last July. She broke her ankle and was unable to work for two weeks. She incurred $1,300 in medical costs, all of which were paid by the owner of the store. The store also gave her $1,000 for pain and suffering resulting from the injury. ASCI continued to pay her salary during the two weeks she missed because of the accident and also paid her $1,200 in disability pay for the time she was unable to work. Under its plan, ASCI pays the premiums for the disability insurance as a nontaxable fringe benefit. 12. Paige received a Form 1099-B from her broker for the sale of the following securities during 2020. The basis amounts were reported to the IRS Amount Security Sales Date Purchase Date Sales Price Her Basis Nebraska state bonds 03/14 2020 1022/2014 $2,300 $1,890 Cassill Corp (500 shares) 10/20/2020 02/19/2018 8.500 9.760 13. In addition to the taxes withheld from her salary, Paige also made timely estimated federal tax payments of $175 per quarter and timely estimated state income tax payments of $150 for the first three quarters. The $150 fourth-quarter state payment was made on December 28, 2020. Paige would like to receive a refund for any overpayment. 14. Because of her busy work schedule, Paige was unable to provide her accountant with the tax documents necessary for filing her 2019 state and federal income tax returns by the due date (July 15, 2020). In filing her extension on July 13, 2020, she made a federal tax payment of $750. Her return was eventually filed on September 25, 2020. In November 2020, she received a federal refund of $180 and a state tax refund of S60. Her itemized deductions for 2019 were $12,430. 15. Paige found a renter for her father's house on August 1. The monthly rent is $400, and the lease agreement is for one year. The lease requires the tenant to pay the first and last months' rent and a $400 security deposit. The security deposit is to be returned at the end of the lease if the property is in good condition. On August 1, Paige received $1,200 from the tenant per the terms of the lease agreement. In November, the plumbiis froze and several pipes burst. The tenant had the repairs made and paid the $300 bill. In December he reduced his rental payment to $100 to compensate for the plumbing repairs. Paige provides you with the following additional information for the rental in 2020: Property taxes $770 Other maintenance expenses 285 Insurance expense 495 Management fee Depreciation (to be computed) 16. The rental property is located at 35 Harvest Street, Orono, Maine 04473. Local practice is to allocate 12 percent of the fair market value of the property to the land. (See item #8.) Paige makes all decisions with respect to the property 17. Paige paid $2,050 in real estate taxes on her principal residence. The real estate tax is used to pay for town schools and other municipal services. 18. Paige drives a 2018 Acura TL. Her car registration fee (based on the car year) is $50 and covers the period 1/1/2020 through 12/31/2020. In addition, she paid $280 in personal property tax to the state based on the fair market value of the car. 19. In addition to the medical costs presented in item #11, Paige incurred the following unreimbursed medical costs: Dentist $ 310 Doctor Prescription drugs 215 Over-the-counter drugs Optometrist Emergency room charges LASIK eye surgery 6,000 Chiropractor 350 ? 390 140 125 440 265 498 390 20. On March 1, Paige took advantage of low interest rates and refinanced her $75,000 home mortgage with her original lender. Paige purchased the home in 2018. The new home loan is for 15 years. She paid $215 in closing costs and $1,500 in discount points (prepaid interest) to obtain the loan. The house is worth S155,000 and Paige's basis in the house is $90,000. As part of the refinancing arrangement, she also obtained a $10,000 home- equity loan. She used the proceeds from the home-equity loan to reduce the balance due on her credit cards. Paige received several Form 1098 statements from her bank for interest paid by her in 2020. Details appear below (also see Exhibit A): Primary home mortgage $7,100 Home-equity loan 435 Credit cards Car loan 21. On May 14, 2020, Paige contributed clothing to the Salvation Army. The original cost of the clothing was $740. She has substantiation valuing the donation at $360. The Salvation Army is located at 350 Stone Ridge Road, Bangor, Maine 04401. In addition, she made the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: Larkin College $850 United Way 125 First Methodist Church 790 Amos House (homeless shelter) 200 Local Chamber of Commerce 100 22. Paige sells real estate in the evening and on weekends (considered an active trade or business). She runs her business from a rental office she shares with several other realtors (692 River Road, Bangor, Maine 04401). The name of her business is Turner Real Estate and the federal identification number is 05-8799561. Her business code is 531210. Paige has been operating in a business-like way since 2008 and has always shown a profit. She had the following income and expenses from her business: Commissions earned $21,250 Expenses: Advertising 2,200 Real estate license Rent 6,000 Utilities 695 23. Paige uses her 2018 Acura TL in her business. During 2020, she properly documented 6,000 business miles. The total mileage on her car (i.e., for both business and personal use) during the year was 15,000 miles (including 200 miles commuting to and from the real estate office). In 2020, Paige elects to use the standard mileage method to calculate her car expenses. She spent $45 on tolls and $135 on parking related to the real estate 24. Paige did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency 25. Paige received two Recovery Rebate checks (stimulus payments) for the full amounts before filing her 2020 tax return. 130 business. INDIVIDUAL TAX RETURN INSTRUCTIONS ACCT4311 FALL 2021 I. Guidelines 1. This is an individual project instead of a group project. However, you are encouraged to discuss with your classmates. Make sure that you don't simply copy the forms. **Warning: If you copy the works from other's (including Publisher's solutions), you and the person you copy from will result in a Zero" grade on this project. Also, both of you could be subject to academic discipline. 2. You have to download the appropriate forms from the IRS website http://www.irs.gov . Make sure the forms are for year 2020 not 2021. 3. DO NOT use any tax software to complete the project. Otherwise, your grade will be severely penalized. 4. You have to attach your calculations (i.e., work papers) as part of the return. Without work papers, your grade will be capped at 30 points. II. Forms Needed You may need the following forms, at least: Form 1040 (including Schedules 1, 2, 3, A, B, C, D, E, and SE), Form 4562, Form 8582, and Form 8995. III. Check Figures Form 1040, Line 11, AGI: $72,145 Form 1040, Line 35a, Amount refunded: $8 Form 1040, Schedule A, Line 17: $19,648 Form 1040, Schedule C, Line 31: 58,327 Form 1040, Schedule D, Line 15: -5850 Form 1040, Schedule E Line 26: -5880 Form 1040, Schedule SE: Line 12: $1,177 Individual Tax Return Problem Required: Use the following information to complete Paige Turner's 2020 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Facts: 1. Paige Turner is single and has two children from her previous marriage. Ali lives with Paige, and Paige provides more than half of her support. Leif lives with his father, Will (Leif lived with Will for all of 2020). Will provides more than half of Leifs support Paige provides you with the following additional information: She uses the cash method of accounting and a calendar year for reporting. She wishes to contribute to the presidential election campaign. o Paige lives at 523 Essex Street, Bangor, Maine 04401 o Paige's birthday is May 31, 1982. Ali's birthday is October 5, 2011. o Leif's birthday is December 1, 2009. Paige's Social Security number is 007-11-4727. o Ali's Social Security number is 005-11-7232. o Leif's Social Security number is 004-22-3419. o Will's Social Security number is 006-33-6333. She does not have any foreign bank accounts or trusts. 2. Paige is employed as a nuclear engineer with Atom Systems Consultants, Inc. (ASCI). ASCI's federal employer identification number is 79-1234466. Paige's pay stubs indicate that she had $4,230 withheld in federal taxes, and $4,987 in state taxes, as well as the appropriate Social Security and Medicare taxes. ASCI has an extensive fringe benefits program for its employees. 3. Paige earned salary of S70,000 before subtracting her 401(k) and flexible spending plan contributions. She contributed $7,000 to her 401(k) account, and she contributed $2,500 to her flexible spending account. 4. ASCI paid $397 of whole life insurance premiums to cover Paige's personal whole life insurance policy. ASCI also paid health club dues of S900 to a nearby health elu on Paige's behalt 5. Taking advantage of ASCI's educational assistance program, during the fall Paige enrolled in two graduate engineering classes at a local college. ASCI paid her tuition, fees, and other course-related costs of $2,300. 6. Paige received free parking in the company's security garage that would normally cost $200 per month 7. Paige manages the safety program for ASCI. In recognition of her superior handling of three potential crises during the year, Paige was awarded the Employee Safety Award on December 15. The cash award was S500. 8. On January 15, 2020, Paige's father died. From her father's estate, she received stock valued at $30,000 (his basis was $12,000) and her father's house valued at $90,000 (his basis in the house was $55,000). 9. Paige owns several other investments and in February 2021 received a statement from her brokerage firm reporting the interest and dividends earned on the investments for 2020: EXHIBIT A This is important tax information and is being furnished to the Internal Revenue Service. 1099-DIV- Dividends and Distributions Entity Description Amount General Dynamics Ordinary/qualified dividends $300 1099-INT - Interest Entity Description Amount New Jersey Economic Development (bonds) Interest $300 IBM Interest 700 State of Nebraska (bonds) Interest 700 1098 - Mortgage Interest Statement Entity Description Amount Sunbelt Credit Union Mortgage interest 57.100 Northeast Bank Mortgage interest 435 Form K-1 (preliminary) Entity Description Grubstake Mining & Development Corp. Ordinary income $2,000 Distribution 1,000 10. Paige owns 1,000 shares of Grubstake Mining & Development common stock. Grubstake is organized as an Scorporation and has 100,000 shares outstanding (Scorp. ID number 45-4567890). Grubstake reported taxable income of $200,000 and paid a distribution of $1.00 per share during the current year. Paige tells you that Grubstake typically does not send out its K-1 reports until late April. However, its preliminary report (see Exhibit A) has been consistent with the K-I for many years. Paige does not materially participate in Grubstake's activities. 11. Paige slipped on a wet spot in front of a computer store last July. She broke her ankle and was unable to work for two weeks. She incurred $1,300 in medical costs, all of which were paid by the owner of the store. The store also gave her $1,000 for pain and suffering resulting from the injury. ASCI continued to pay her salary during the two weeks she missed because of the accident and also paid her $1,200 in disability pay for the time she was unable to work. Under its plan, ASCI pays the premiums for the disability insurance as a nontaxable fringe benefit. 12. Paige received a Form 1099-B from her broker for the sale of the following securities during 2020. The basis amounts were reported to the IRS Amount Security Sales Date Purchase Date Sales Price Her Basis Nebraska state bonds 03/14 2020 1022/2014 $2,300 $1,890 Cassill Corp (500 shares) 10/20/2020 02/19/2018 8.500 9.760 13. In addition to the taxes withheld from her salary, Paige also made timely estimated federal tax payments of $175 per quarter and timely estimated state income tax payments of $150 for the first three quarters. The $150 fourth-quarter state payment was made on December 28, 2020. Paige would like to receive a refund for any overpayment. 14. Because of her busy work schedule, Paige was unable to provide her accountant with the tax documents necessary for filing her 2019 state and federal income tax returns by the due date (July 15, 2020). In filing her extension on July 13, 2020, she made a federal tax payment of $750. Her return was eventually filed on September 25, 2020. In November 2020, she received a federal refund of $180 and a state tax refund of S60. Her itemized deductions for 2019 were $12,430. 15. Paige found a renter for her father's house on August 1. The monthly rent is $400, and the lease agreement is for one year. The lease requires the tenant to pay the first and last months' rent and a $400 security deposit. The security deposit is to be returned at the end of the lease if the property is in good condition. On August 1, Paige received $1,200 from the tenant per the terms of the lease agreement. In November, the plumbiis froze and several pipes burst. The tenant had the repairs made and paid the $300 bill. In December he reduced his rental payment to $100 to compensate for the plumbing repairs. Paige provides you with the following additional information for the rental in 2020: Property taxes $770 Other maintenance expenses 285 Insurance expense 495 Management fee Depreciation (to be computed) 16. The rental property is located at 35 Harvest Street, Orono, Maine 04473. Local practice is to allocate 12 percent of the fair market value of the property to the land. (See item #8.) Paige makes all decisions with respect to the property 17. Paige paid $2,050 in real estate taxes on her principal residence. The real estate tax is used to pay for town schools and other municipal services. 18. Paige drives a 2018 Acura TL. Her car registration fee (based on the car year) is $50 and covers the period 1/1/2020 through 12/31/2020. In addition, she paid $280 in personal property tax to the state based on the fair market value of the car. 19. In addition to the medical costs presented in item #11, Paige incurred the following unreimbursed medical costs: Dentist $ 310 Doctor Prescription drugs 215 Over-the-counter drugs Optometrist Emergency room charges LASIK eye surgery 6,000 Chiropractor 350 ? 390 140 125 440 265 498 390 20. On March 1, Paige took advantage of low interest rates and refinanced her $75,000 home mortgage with her original lender. Paige purchased the home in 2018. The new home loan is for 15 years. She paid $215 in closing costs and $1,500 in discount points (prepaid interest) to obtain the loan. The house is worth S155,000 and Paige's basis in the house is $90,000. As part of the refinancing arrangement, she also obtained a $10,000 home- equity loan. She used the proceeds from the home-equity loan to reduce the balance due on her credit cards. Paige received several Form 1098 statements from her bank for interest paid by her in 2020. Details appear below (also see Exhibit A): Primary home mortgage $7,100 Home-equity loan 435 Credit cards Car loan 21. On May 14, 2020, Paige contributed clothing to the Salvation Army. The original cost of the clothing was $740. She has substantiation valuing the donation at $360. The Salvation Army is located at 350 Stone Ridge Road, Bangor, Maine 04401. In addition, she made the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: Larkin College $850 United Way 125 First Methodist Church 790 Amos House (homeless shelter) 200 Local Chamber of Commerce 100 22. Paige sells real estate in the evening and on weekends (considered an active trade or business). She runs her business from a rental office she shares with several other realtors (692 River Road, Bangor, Maine 04401). The name of her business is Turner Real Estate and the federal identification number is 05-8799561. Her business code is 531210. Paige has been operating in a business-like way since 2008 and has always shown a profit. She had the following income and expenses from her business: Commissions earned $21,250 Expenses: Advertising 2,200 Real estate license Rent 6,000 Utilities 695 23. Paige uses her 2018 Acura TL in her business. During 2020, she properly documented 6,000 business miles. The total mileage on her car (i.e., for both business and personal use) during the year was 15,000 miles (including 200 miles commuting to and from the real estate office). In 2020, Paige elects to use the standard mileage method to calculate her car expenses. She spent $45 on tolls and $135 on parking related to the real estate 24. Paige did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency 25. Paige received two Recovery Rebate checks (stimulus payments) for the full amounts before filing her 2020 tax return. 130 business. INDIVIDUAL TAX RETURN INSTRUCTIONS ACCT4311 FALL 2021 I. Guidelines 1. This is an individual project instead of a group project. However, you are encouraged to discuss with your classmates. Make sure that you don't simply copy the forms. **Warning: If you copy the works from other's (including Publisher's solutions), you and the person you copy from will result in a Zero" grade on this project. Also, both of you could be subject to academic discipline. 2. You have to download the appropriate forms from the IRS website http://www.irs.gov . Make sure the forms are for year 2020 not 2021. 3. DO NOT use any tax software to complete the project. Otherwise, your grade will be severely penalized. 4. You have to attach your calculations (i.e., work papers) as part of the return. Without work papers, your grade will be capped at 30 points. II. Forms Needed You may need the following forms, at least: Form 1040 (including Schedules 1, 2, 3, A, B, C, D, E, and SE), Form 4562, Form 8582, and Form 8995. III. Check Figures Form 1040, Line 11, AGI: $72,145 Form 1040, Line 35a, Amount refunded: $8 Form 1040, Schedule A, Line 17: $19,648 Form 1040, Schedule C, Line 31: 58,327 Form 1040, Schedule D, Line 15: -5850 Form 1040, Schedule E Line 26: -5880 Form 1040, Schedule SE: Line 12: $1,177