INDIVIDUAL

TAX RETURN

PROJECT

ROBERT

ORR

INDIVIDUAL

FEDERAL

INCOME

TAX

RETURN

2015-

2016

ANNUAL

EDITION

ALL

DATES

RELATE

TO

YEAR

2015

UNLESS

STATED

OTHERWISE

Robert

G . (age 61), SSN 111-

22-

1111, is a widow

er of

Barbara

Orr, SSN 123-

45-

6787, who

passed away on July

1, 2014. Robert

resides at 4 Hook Road, Rye, NY 10580. Robert

works as a

consulting engineer

and is also self

-employed. He

owns his

own Consulting

business that he

operates in town.

The

following

filing

information

relates

to Robert

:

?

Robert

is not sure what filing status he

should be in 2015 since h

is wife

passed away in

2014

.

?

Robert

does not

elects

to contribute

to the

Presidential

Election

Campaign

Fund.

?

Robert

is a

calendar

year

taxpayer

.

?

Robert

follow

s the

cash

basis

method.

?

Robert

prefer

that

any

tax

overpayment

to be

refunded to him

.

?

Round all cents to the nearest dollar (Round up .50 Round down .49) No cents on the return.

1. Robert

?s annual salar

y from King Engineering

is included on the attached W

-2. King

Engineering

does not provide a

ny retirement benefits

. Robert

has a retirement account that he

contributes to.

2. Robert

maintains a consulting practice

, Robert Orr Engineering,

through which he advises

clients on various matters. Robert

rents office

space in town

, at

45 Main

Street, Rye

, NY 10580.

He

drives to his clients?

office during the year to conduct business

. He

uses his

personal car to

drive to these locat

ions

. His

professional activity code is 541990 and his

employer identification

number is 04-

9876543.

His

clients consist of small to medium size local businesses

. Robert

collected $

101,781 in revenues

during 2015. This total includes a $2,000 payment for work he

performed in 2014

and does not include $4,000 he

billed in December for work performed in late

2015. In addition,

Robert

has an unpaid invoice

from a client f

or $

4,800 for work he

performed

in 2013. This client has

not been heard from since

January

2014. Robert

has tried to locate this

individual to no avail. Robert

feels certain that he

will never collect the $

4, 800 he

is owed.

His

business expenses for 2015 are as follows:

Wages

$24,877

Entertainment (on perspective clients)

3,100

Office Expense

1,700

Advertising

2,400

Legal Fees

300

Utilities

3,001

Speeding Ticket

350

Rent

7,200

Health Insurance (this policy

covers the whole family)

3,800

Business portion of Repairs, Gas and Oil

on Toyota

1,200

In addition,

Robert

drove his

2014 Jeep

(purchased on February

19, 2014)

2,401 miles to

perform consulting duties with

his

clients. Robert

does not know if he

can take the standard

mileage

, actual cost

allocated

to the car or both. Robert

drove the car a total of 12,500 miles in

2015.

Robert

utilized

the

following

assets

in his

bookkeeping

business:

Description

Date

Placed

Adjusted

Basis

when

Business

of

Property

:

into

Service:

Placed

into

Service:

Use:

Computer

7/1/ 13

$1,975

100%

Monitor

7 /7/14

780

100%

Desk

1/21/14

3,250

100%

Laptop

2/9/15 1

,275

100%

Printer

8/ 28/1

5 1,069

100%

All of the assets listed above were purchased new by Robert

on the date they were placed into

service. For Assets

placed in service in 2015

, Robert

elected the cost recovery method that

yielded the

highest

possible cost recovery deduction method for that year.

For assets purchased

prior to 2015

, all of these

assets were depreciated under the MACRS

method (

None

were depreciated under Section 179). For each year of acquisition, the highest

possible deduction under MACRS was elected. Accordingly the expense method of 179 was

not elected.

No additional first ye

ar depreciation was taken in any year.

3. On a morning walk in November 2014, Robert

was injured when he was sideswiped by a

delivery truck. Robert

was hospitalized for several days, and the driver of the truck was ticketed

and charged with DUI. The owner of the truck, a national parcel delivery service, was concerned

that further adverse publicity might result if the matter went to court. Consequent

ly, the owner

offered Robert

a settlement if he would sign a release. Under the settlement, h

is medical

expenses were paid and he would receive a cash award of $2

25,000. Since he suffered no

permanent injury as a result of the mishap, he signed the release

in April 2015 and received the

$225,000 settlement. The damages awarded were $200,000 for personal injury, $5,000 for

punitive damages against the driver and $20,000 for loss of income because his

injuries

prevented his

from working for some time.

4. A.

Robert

sold

no

stock that was

reported

on

Form

1099-

B

B.

Robert

also

sold

the

following

capital

assets

:

?

1,000 shares

of

Deep River

Corp. The

shares

were

purchased

by

Robert

for

$3,248 on the

New

York

Stock

Exchange on January

2. They

were sold

on the

New

York

Stock

Exchange

for $5,948 on

December

27

.

?

Robert

inherited an antique gun collecti

on from his father when he died,

on December

28, 2014, consisting of mainly large caliber rifles used for

buffalo hunting. Robert

thinks

his father's cost basis was $5,000 in these

guns, the

collection had a date

-of-death value of $

19,000. Concerned

about the maintenance and security of the collection, David sold it to a

dealer for $

23,000 on August

18, 2015.

?

800 shares of

Boston Bay

Corporation. These shares were received by

Robert

as a gi

ft from his

neighbor

on May 8, 2012

. His

neighbors

purchased the stock on January 31, 2011 for

$6,500. The fair market value

of the stock at the time of the gift was $

7,362. No gift tax was paid on the

trans

fer. The shares were sold to an unrelated party on November 5

for

$8,150.

?

Robert

acquired 1,000 shares of common stock in Star, Inc.

on March 17,

2013, to hold for investment purposes. Robert

performed services for the

company in late 2013, submitting a bill for $4,000. Because Star, Inc.

was

experiencing cash

-flow problems at the time, Robert

accepted the stock as

payment for his services. Unfortunately, Star is currently in bankruptcy

,

and e

xpectations are that the shareholders will not recover anything on

their stock investments. The stock is not publicly traded.

?

Robert

has a long

-term capital loss carryover of $

3,750 from 2014

All

of the

capital

assets

listed

above

were

held

by the

Robert

for

investment

purposes.

5.

In March 2014, Joan Myers, one of Robert?

s clients

, left town to get away from a troublesome

ex-husband. In order to help Joan establish a business elsewhere, Robert

loaned her $6,000. Joan

signed a note dated March 3, 2014, that was payable in one year with 6% interest. On December

3, 2015, Robert

learned that Joan had been declared bankrupt and was awaiting trial on felony

theft charges. Robert

never received payment from Joan, nor did he receive any interest on the

loan.

6. Besides the items previously noted, the Robert

had the following receipts for 2015:

Interest income:

State of New York

bonds

$875

Ford

C orporate bonds

350

Bank of America

240

$ 1,465

Cash gifts from Robert

?s parents

29,000

Federal income tax refund (

2014 return)

950

Gambling Winnings

5,100

Robert

was the beneficiary of a life insurance policy that his cousin purchased on his own life.

Robert

?s cousin passed away on May 5

. Robert

collected $

75,000 from the life insurance policy

on September 22

.

7. In addition to the items already noted, the Robert

had the following expenditures for 2015:

Robert

?s contribution to Traditional IRA

$5,500

Gambling loss

8,125

Life insurance premiums

3,000

Medical and dental expenses for Robert

7,500

Medical expenses paid by

Robert

for Molly

3,025

Taxes:

Taxes on Real Estate

$4,800

Ad valorem taxes on

personal property

750

State and

local sales taxes

4,210

9,760

Interest paid on VISA credit card during the year

3,987

Interest paid on Robert

?s second car

350

Principle payments on Robert

?s second

car loan

1,987

Cash Contributions:

Salvation Army

( New York

branch)

2,000

Gifts to Church of God

750

Cash given

to a local family

500

Donation to New York governor?s election fund

100

3,350

The life insurance premiums

relate to the universal life insurance policies that Robert

own

s. The

first

beneficiary on the

polic

y is Robert

?s daughter

. Robert

contributed to the governor?s

campaign fund because he

thinks his influence is key in

getting business

.

In March 2015, the New York

Department of Revenue audited Robert

's state inc

ome tax returns

for 2012 and 2013. She was assessed additional state income tax of $560 for these years.

Surprisingly, no interest was included in the assessment. Robert

paid the back taxes promptly.

8. Robert

house was burglarized on February

5 and his

championship ring

was stolen

. Robert

's

ring

was worth $41,000.

Robert

received the ring on May 8, 1994

and has a basis of

$25,500.

The ring

was never

recovered. Insurance recovery was limited to $

9,000.

9. Relevant Social Security numbers are as follows:

Name and

Social Security Number

?

Derek

Orr, SSN 123-

45-

6783, son of Robert

. Born December 3, 1990.

Full

-

time student at the University of Maine.

Derek

lives with Robert

and Robert

provided 60%

of his support. His income consisted of wages of

$19,000.

?

Molly Orr, SSN 123-

45-

6784, daughter

of Robert

. Born August 2, 1993.

Molly

works in a

restaurant. Molly is full-

time student at SUNY. Robert

provides 40% of her

support while

Molly

provides 30% and the balance came from other sources

. Molly

lives with

Robert

.

Her income consisted of wages of $27,000.

?

Betty

Orr

, SSN 123-

45-

6785, daughter of Robert

. Born November 1

, 1996.

Betty works full

-time in a local shop.

Robert

provided 70 percent of her support.

Her income consisted of

wages of $21,000. She did live with Robert

for the

year

.

?

Robert

Orr Jr.

, SSN 123-

45-

6786, son of Robert

. Born November 1, 1996. Full

-time

student at the University of New Hampshire

. Robert

provided 100 percent of his

support.

He earned no income.

He live

d with Robert

for the year

.

Robert

also

supported

the

following

person:

?

Doris Paul

, mother of Robert

, SSN 123-

45-

6787. Widow. Born February 29, 1928. Resides

in Clearwater

, Florida

. Robert

provided 85 percent of her total support. Her sole income

consisted of

$3,900 of pension income

and $7,000 of Social Security benefits

.

?

John Robert

, cousin of Robert

, SSN 123-

45-

6788. Widower. Born October 8

, 1961.

Live

s in an assisted living complex

all year long

. Robert

provided 65 percent of his total

support. His sole income consisted of

$9,100 of Social Security benefits

10.

Robert

made the following deposits with the United States Treasury for

their Federal income tax liability from their own personal checking account

on the dates indicated

:

?

April 17,

2015

$

2,0

00

?

June

15,

2015

2,0

00

?

September

17,

2015

2,0

00

?

December

15,

2015

2,0

00

11. All source documents for wages, dividends, stock sales and interest paid are at the end.

These items are not reported in any of the information above.

Ignore the year on the source

documents and assume that they are all for the tax year 2015.

REQUIREMEN

T

Prepare the Federal income tax return with all supporting schedules and

attachm

ents for Robert

Orr for 2015. Specifically, submit the following

completed forms with required schedules:

?

Form 1040: U.S. Individual Income Tax Return

?

Form 1040 Schedule A: Itemized Deductions

?

Form 1040 Schedule B: Interest and Ordinary Dividends

?

Form 1040 Schedule C: Profit and Loss from Business

?

Form 1040 Schedule D: Capital Gains and Losses

?

Form 1040 Schedule SE: Self

-Employment Tax

?

Form 4562: Depreciation and Amortization (For Schedule C)

?

Form 4684: Casualties and Thefts

?

Form 8949: Sales and Other Dispositions of Capital Assets

Use all opportunities to minimize tax liability. In this regard, assume that the

Robert

always prefer to forego potential future tax savings in favor of current

year tax savings.

INDIVIDUAL TAX RETURN PROJECT ROBERT ORR INDIVIDUAL FEDERAL INCOME TAX RETURN 2015-2016 ANNUAL EDITION ALL DATES RELATE TO YEAR 2015 UNLESS STATED OTHERWISE Robert G. (age 61), SSN 111-22-1111, is a widower of Barbara Orr, SSN 123-45-6787, who passed away on July 1, 2014. Robert resides at 4 Hook Road, Rye, NY 10580. Robert works as a consulting engineer and is also self-employed. He owns his own Consulting business that he operates in town. The following filing information relates to Robert: Robert is not sure what filing status he should be in 2015 since his wife passed away in 2014. Robert does not elects to contribute to the Presidential Election Campaign Fund. Robert is a calendar year taxpayer. Robert follows the cash basis method. Robert prefer that any tax overpayment to be refunded to him. Round all cents to the nearest dollar (Round up .50 Round down .49) No cents on the return. 1. Robert's annual salary from King Engineering is included on the attached W-2. King Engineering does not provide any retirement benefits. Robert has a retirement account that he contributes to. 2. Robert maintains a consulting practice, Robert Orr Engineering, through which he advises clients on various matters. Robert rents office space in town, at 45 Main Street, Rye, NY 10580. He drives to his clients' office during the year to conduct business. He uses his personal car to drive to these locations. His professional activity code is 541990 and his employer identification number is 04-9876543. His clients consist of small to medium size local businesses. Robert collected $101,781 in revenues during 2015. This total includes a $2,000 payment for work he performed in 2014 and does not include $4,000 he billed in December for work performed in late 2015. In addition, Robert has an unpaid invoice from a client for $4,800 for work he performed in 2013. This client has not been heard from since January 2014. Robert has tried to locate this individual to no avail. Robert feels certain that he will never collect the $4,800 he is owed. His business expenses for 2015 are as follows: Wages Entertainment (on perspective clients) Office Expense Advertising Legal Fees Utilities Speeding Ticket Rent Health Insurance (this policy covers the whole family) Business portion of Repairs, Gas and Oil on Toyota $24,877 3,100 1,700 2,400 300 3,001 350 7,200 3,800 1,200 In addition, Robert drove his 2014 Jeep (purchased on February 19, 2014) 2,401 miles to perform consulting duties with his clients. Robert does not know if he can take the standard mileage, actual cost allocated to the car or both. Robert drove the car a total of 12,500 miles in 2015. Robert utilized the following assets in his bookkeeping business: Description of Property: Computer Monitor Desk Laptop Printer Date Placed Adjusted Basis when into Service: Placed into Service: 7/1/13 7 /7/14 1/21/14 2/9/15 8/28/15 $1,975 780 3,250 1 ,275 1,069 Business Use: 100% 100% 100% 100% 100% All of the assets listed above were purchased new by Robert on the date they were placed into service. For Assets placed in service in 2015, Robert elected the cost recovery method that yielded the highest possible cost recovery deduction method for that year. For assets purchased prior to 2015, all of these assets were depreciated under the MACRS method (None were depreciated under Section 179). For each year of acquisition, the highest possible deduction under MACRS was elected. Accordingly the expense method of 179 was not elected. No additional first year depreciation was taken in any year. 3. On a morning walk in November 2014, Robert was injured when he was sideswiped by a delivery truck. Robert was hospitalized for several days, and the driver of the truck was ticketed and charged with DUI. The owner of the truck, a national parcel delivery service, was concerned that further adverse publicity might result if the matter went to court. Consequently, the owner offered Robert a settlement if he would sign a release. Under the settlement, his medical expenses were paid and he would receive a cash award of $225,000. Since he suffered no permanent injury as a result of the mishap, he signed the release in April 2015 and received the $225,000 settlement. The damages awarded were $200,000 for personal injury, $5,000 for punitive damages against the driver and $20,000 for loss of income because his injuries prevented his from working for some time. 4. A. Robert sold no stock that was reported on Form 1099-B B. Robert also sold the following capital assets: 1,000 shares of Deep River Corp. The shares were purchased by Robert for $3,248 on the New York Stock Exchange on January 2. They were sold on the New York Stock Exchange for $5,948 on December 27. Robert inherited an antique gun collection from his father when he died, on December 28, 2014, consisting of mainly large caliber rifles used for buffalo hunting. Robert thinks his father's cost basis was $5,000 in these guns, the collection had a date-of-death value of $19,000. Concerned about the maintenance and security of the collection, David sold it to a dealer for $23,000 on August 18, 2015. 800 shares of Boston Bay Corporation. These shares were received by Robert as a gift from his neighbor on May 8, 2012. His neighbors purchased the stock on January 31, 2011 for $6,500. The fair market value of the stock at the time of the gift was $7,362. No gift tax was paid on the transfer. The shares were sold to an unrelated party on November 5 for $8,150. Robert acquired 1,000 shares of common stock in Star, Inc. on March 17, 2013, to hold for investment purposes. Robert performed services for the company in late 2013, submitting a bill for $4,000. Because Star, Inc. was experiencing cash-flow problems at the time, Robert accepted the stock as payment for his services. Unfortunately, Star is currently in bankruptcy, and expectations are that the shareholders will not recover anything on their stock investments. The stock is not publicly traded. Robert has a long-term capital loss carryover of $3,750 from 2014 All of the capital assets listed above were held by the Robert for investment purposes. 5. In March 2014, Joan Myers, one of Robert's clients, left town to get away from a troublesome ex-husband. In order to help Joan establish a business elsewhere, Robert loaned her $6,000. Joan signed a note dated March 3, 2014, that was payable in one year with 6% interest. On December 3, 2015, Robert learned that Joan had been declared bankrupt and was awaiting trial on felony theft charges. Robert never received payment from Joan, nor did he receive any interest on the loan. 6. Besides the items previously noted, the Robert had the following receipts for 2015: Interest income: State of New York bonds Ford Corporate bonds Bank of America Cash gifts from Robert's parents Federal income tax refund (2014 return) Gambling Winnings $875 350 240 $ 1,465 29,000 950 5,100 Robert was the beneficiary of a life insurance policy that his cousin purchased on his own life. Robert's cousin passed away on May 5. Robert collected $75,000 from the life insurance policy on September 22. 7. In addition to the items already noted, the Robert had the following expenditures for 2015: Robert's contribution to Traditional IRA Gambling loss Life insurance premiums Medical and dental expenses for Robert Medical expenses paid by Robert for Molly $5,500 8,125 3,000 7,500 3,025 Taxes: Taxes on Real Estate Ad valorem taxes on personal property State and local sales taxes $4,800 750 4,210 Interest paid on VISA credit card during the year Interest paid on Robert's second car Principle payments on Robert's second car loan 3,987 350 1,987 Cash Contributions: Salvation Army (New York branch) Gifts to Church of God 2,000 750 9,760 Cash given to a local family Donation to New York governor's election fund 500 100 3,350 The life insurance premiums relate to the universal life insurance policies that Robert owns. The first beneficiary on the policy is Robert's daughter. Robert contributed to the governor's campaign fund because he thinks his influence is key in getting business. In March 2015, the New York Department of Revenue audited Robert's state income tax returns for 2012 and 2013. She was assessed additional state income tax of $560 for these years. Surprisingly, no interest was included in the assessment. Robert paid the back taxes promptly. 8. Robert house was burglarized on February 5 and his championship ring was stolen. Robert's ring was worth $41,000. Robert received the ring on May 8, 1994 and has a basis of $25,500. The ring was never recovered. Insurance recovery was limited to $9,000. 9. Relevant Social Security numbers are as follows: Name and Social Security Number Derek Orr, SSN 123-45-6783, son of Robert. Born December 3, 1990. Fulltime student at the University of Maine. Derek lives with Robert and Robert provided 60% of his support. His income consisted of wages of $19,000. Molly Orr, SSN 123-45-6784, daughter of Robert. Born August 2, 1993. Molly works in a restaurant. Molly is full-time student at SUNY. Robert provides 40% of her support while Molly provides 30% and the balance came from other sources. Molly lives with Robert. Her income consisted of wages of $27,000. Betty Orr, SSN 123-45-6785, daughter of Robert. Born November 1, 1996. Betty works full-time in a local shop. Robert provided 70 percent of her support. Her income consisted of wages of $21,000. She did live with Robert for the year. Robert Orr Jr., SSN 123-45-6786, son of Robert. Born November 1, 1996. Full-time student at the University of New Hampshire. Robert provided 100 percent of his support. He earned no income. He lived with Robert for the year. Robert also supported the following person: Doris Paul, mother of Robert, SSN 123-45-6787. Widow. Born February 29, 1928. Resides in Clearwater, Florida. Robert provided 85 percent of her total support. Her sole income consisted of $3,900 of pension income and $7,000 of Social Security benefits. John Robert, cousin of Robert, SSN 123-45-6788. Widower. Born October 8, 1961. Lives in an assisted living complex all year long. Robert provided 65 percent of his total support. His sole income consisted of $9,100 of Social Security benefits 10. Robert made the following deposits with the United States Treasury for their Federal income tax liability from their own personal checking account on the dates indicated: April 17, 2015 June 15,2015 September 17, 2015 December 15,2015 $2,000 2,000 2,000 2,000 11. All source documents for wages, dividends, stock sales and interest paid are at the end. These items are not reported in any of the information above. Ignore the year on the source documents and assume that they are all for the tax year 2015. REQUIREMENT Prepare the Federal income tax return with all supporting schedules and attachments for Robert Orr for 2015. Specifically, submit the following completed forms with required schedules: Form 1040: U.S. Individual Income Tax Return Form 1040 Schedule A: Itemized Deductions Form 1040 Schedule B: Interest and Ordinary Dividends Form 1040 Schedule C: Profit and Loss from Business Form 1040 Schedule D: Capital Gains and Losses Form 1040 Schedule SE: Self-Employment Tax Form 4562: Depreciation and Amortization (For Schedule C) Form 4684: Casualties and Thefts Form 8949: Sales and Other Dispositions of Capital Assets Use all opportunities to minimize tax liability. In this regard, assume that the Robert always prefer to forego potential future tax savings in favor of current year tax savings