Instructions You are a research assistant in a tax office and have been asked to prepare a memo to a partner based on the problem provided below You will be graded on a properly formatted memo, grammar, complete and correct answers Submission should be a minimum of 2 pages Chapter 2 Section 2 3f Communicating Tax Research has examples of properly formatted Memos and Client Letters Chapter 3 Research Problem 2 page 3 57 Research Problem 2 John and Janet Baker are married and maintain a household in which the following persons live Calvin and Florence Carter, and Darin, Andrea, and Morgan Baker Calvin and Florence are Janets parents, who are retired During the year, they receive $19,000 in nontaxable funds (e g , disability income, interest on municipal bonds, and Social Security benefits) Of this amount, $8,000 is spent equally between them for clothing, transportation, and recreation (e g , vacation) and the balance of $11,000 is invested in tax exempt securities Janet paid $1,000 for her mothers dental work and the $1,200 premium on an insurance policy her father owned on his own life Calvin also had medical expenses, but he insisted on paying for them with his own funds Darin is the Bakers 18 year old son, who is not a student but operates a pool cleaning service on a part time basis During the year, he earns $14,000 from the business, which he places in a savings account for later college expenses Andrea is the Bakers 19 year old daughter, who does not work or go to school Tired of the inconvenience of borrowing and sharing the family car, during the year, she purchased a Camaro for $21,000 Andrea used funds from a savings account she had established several years ago with an inheritance from her paternal grandfather Morgan is the Bakers 23 year old daughter To attend graduate school at a local university, she applied for and obtained a student loan of $20,000 She uses the full amount to pay her college tuition The Bakers fair rental value of their residence, including utilities, is $14,000, and their total food expense for the household is $10,500 How many dependents are the Bakers entitled to claim for the year Explain your answer From a planning standpoint, how might the Bakers have improved the tax result Partial list of research aids Reg 1 1521(a) and 1(c) IRS Publication 17 ( Your Federal Income Tax ), Chapter 3 Use internet tax resources to address the following questions Look for reliable websites and blogs of the IRS and other government agencies, media outlets, businesses, tax professionals, academics, think tanks, and political outlets

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 10, 2024

Instructions: You are a research assistant in a tax office and have been asked to prepare a memo to a partner based on the problem

Instructions:

You are a research assistant in a tax office and have been asked to prepare a memo to a partner based on the problem provided below.
You will be graded on a properly formatted memo, grammar, complete and correct answers.
Submission should be a minimum of 2 pages.
Chapter 2 Section 2-3f Communicating Tax Research has examples of properly formatted Memos and Client Letters

Chapter 3 Research Problem 2 page 3-57

Research Problem 2. John and Janet Baker are married and maintain a household in which the following persons live: Calvin and Florence Carter, and Darin, Andrea, and Morgan Baker.

Calvin and Florence are Janets parents, who are retired. During the year, they receive $19,000 in nontaxable funds (e.g., disability income, interest on municipal bonds, and Social Security benefits). Of this amount, $8,000 is spent equally between them for clothing, transportation, and recreation (e.g., vacation) and the balance of $11,000 is invested in tax-exempt securities. Janet paid $1,000 for her mothers dental work and the $1,200 premium on an insurance policy her father owned on his own life. Calvin also had medical expenses, but he insisted on paying for them with his own funds.
Darin is the Bakers 18-year-old son, who is not a student but operates a pool-cleaning service on a part-time basis. During the year, he earns $14,000 from the business, which he places in a savings account for later college expenses.
Andrea is the Bakers 19-year-old daughter, who does not work or go to school. Tired of the inconvenience of borrowing and sharing the family car, during the year, she purchased a Camaro for $21,000. Andrea used funds from a savings account she had established several years ago with an inheritance from her paternal grandfather.
Morgan is the Bakers 23-year-old daughter. To attend graduate school at a local university, she applied for and obtained a student loan of $20,000. She uses the full amount to pay her college tuition.

The Bakers fair rental value of their residence, including utilities, is $14,000, and their total food expense for the household is $10,500.

How many dependents are the Bakers entitled to claim for the year? Explain your answer.
From a planning standpoint, how might the Bakers have improved the tax result?

Partial list of research aids:

Reg. 1.1521(a) and 1(c).

IRS Publication 17 (Your Federal Income Tax), Chapter 3.

Use internet tax resources to address the following questions. Look for reliable websites and blogs of the IRS and other government agencies, media outlets, businesses, tax professionals, academics, think tanks, and political outlets.