JU W WU Presidential Election is we Yes boxes on their Form 1040. Everyone was overed by health insurance all year. Required: Complete the Holmans Federal income tax return for 2018. If they have a refund they would prefer having it credited against their 2019 taxes. REHENSIVE TAX RETURN PROBLEM 2 Richard M. and Anna K. Wilson a. Richard and Anna Wilson are married and file a joint return. Richard is 47 years of age, and Anna is 46. Richard is employed by Telstar Corporation as its controller, and Anna is self-employed as a travel agent. They have three children: Michael, age 22; Lisa, age 17; and Laura, age 14. Michael is a full- time student at Rutgers University. Lisa and Laura both live at home and attend school full-time. The Wilsons currently live at 3721 Chestnut Ridge Road, Montvale, New Jersey 07645, in a home they have owned since July 2007. Richard and Anna provided over half of the support of Anna's mother, Ruth Knapp, who currently lives in a nursing home in Mahwah, New Jersey. They also provided over half of the support of their son, Michael, who earned $4,750 during the summer as an accounting student intern for a national ac- counting firm. b. Richard received a Form W-2 from his employer reporting the following in- formation for 2018: Richard M. Wilson, Social Security No. 294-38-6249: $63,000 Gross wages and taxable benefits .. 11,400 Federal income taxes withheld.... EL.C.A. taxes withheld: 3,906 Social Security ...... Medicare 1,850 914 State income taxes withheld ....... ate) for Richard's personal use of The taxable benefits reported on his W-2 Form include $2,700 (based currently deductible standard auto mileage rate) for Richard's pers the company car provided by his employer. c. Anna operates her business under the name "Wilson's Travel Agency," located at 7200 Treeline Drive, Montvale, NJ 07645. Anna has one full-time employ- ee, and her Federal employer identification number is 74-2638596. Anna uses the cash method of accounting for her business, and her records for 2018 show the following: $134,000 Fees and commissions...... Expenses: 1,425 Advertising Bank service charges ......... 560 Dues and subscriptions .......... 1,100 Insurance Interest on furniture loan.................... 960 Professional services.................! 700 Officerent........... 6,000 .... 470 Office supplies.............. Meals and entertainment............... 1,700 Payroll taxes ........... 2.170 ........ Utilities and telephone..................... 3.480 Wages paid to full-time employee 22.800 Miscellaneous expenses.............. Meals and entertainment expense of $1.700 included amounts spent for client development of $1.000 for meals and $700 for entertainment. Automobile expenses and amounts paid to her children are not included in the above expenses. Anna paid her daughters Lisa and Laura $750 and $450, respectively, for working part-time during the summer. Since she did not withhold or pay any Federal income or employment taxes on these amounts, Anna is not certain that she is allowed a deduction. She does feel that the amounts paid to her children were reasonable, however, Anna purchased a new 2017 Honda Accord on November 20 of last year, and her lax accountant used the actual cost method in determining the deduct- ible business expenses for her 2017 Federal tax return. Because the deductible amount seemed so small, she is not certain whether she should claim actual expenses (including depreciation), or simply use the automatic mileage meth od. She has the following records relating to the business auto: 20 $26,000 Original cost .... Depreciation claimed in 2017 ($26,000 x 5% = $1,300 x 80% business use) Gas, oil, and repairs in 2018 .................... ........... Parking and toils directly related to her work paid in 2018.. Insurance for 2018........................................................ Interest on car loan for 2018............. 1,040 1.790 410 650 750 Anna drove the auto 20,000 miles for business purposes and 5,000 miles for personal purposes during the year. The above expenses for 2018 have not been reduced to reflect her personal use of the vehicle. On January 7, 2018, Anna purchased the following items for use in her business: Office furniture ......... Copying machine. Dell notebook computer ..................................... Printer Fax machine .................. . . .. $8.900 5,700 1,500 1,600 300 Anna wishes to claim the maximum amount of depreciation deductions or other cost recovery allowed on the office furniture and equipment. 1: Continuous Tax Return Problems d. Richard attended an a in October. He incurred the following accounting convention in Washington, D.C. for three days a incurred the following unreimbursed expenses related to the |-15 trip: fare (round-trip).... Registration fee for meeting Hotel cost ........................... . .............. ................. Meals Taxis ............. Airport parking ..... Road tolls e. Richard and Anna received Forms 1099-INT reporting interest income earned during 2018 from the following: $845 Citibank of Mahwah Montvale National Bank ........ Telstar Employees' Credit Union... 900 f. The Wilsons received the following dividends during 2018: $300 200 Telstar Corporation ... Chevron Corporation These dividends were labeled as "qualified dividends" on the respective Forms 1099-DIV. The Wilsons have never had a foreign bank account or created a foreign trust The Wilsons had the following property transactions for 2018 1. Anna sold 300 shares of Chevron Corporation stock on September 2018. in order to pay for Michael's fall semester of college. She received a check in the amount of $14.950 from Merrill Lynch on September 10, 2018. The stock was from a block of 1,000 shares that Richard and Anna had purchased for $35 per share on February 1, 2005 h. They gave each of the children 100 shares of Chevron stock on December 30, 2018, when the stock was valued at $62.50 per share. The stock was from the same block of stock purchased for $35 per share in February, 2004. No gift taxes were paid on these gifts They gave 100 shares of Chevron stock to Richard's alma mater, Rider University, on December 29, 2018. The average trading price of Chevron stock on that day was $61.25. This stock was also from the original block of 1,000 shares the Wilsons had purchased for $35 per share in 2005. The dress of Rider University is 2083 Lawrenceville Road, Lawrenceville New Jersey 08648. W May 17, 2018 Richard and Anna were notified by the bankruptcy e handling the affairs of Bubbline Crude Oil Company in Houston, ds, that the company's shareholders would not receive anything for judge handling Texas, that their stockow stock ownership because all of the assets were used to satisfy claims creditors. Richard had nurchased 2,000 shares of the stock for 36 per Te on April 1. 2009. Unfortunately, the stock did not meet the require ments of $ 1244 Richard and Anna own a rental condominium located at 7777 Boardwalk in Atlantic City, New Jersey. The unit was purchased on July 29, 2017, for $25,000 cash and a $175,000 mortgage. Of the purchase price, S50,000 was allocated to the land. The following items relate to the rental unit for 2018: $16,400 Gross rents ....... Expenses Management fee Cleaning and maintenance Insurance....... ... Property taxes................... Interest paid on mortgage ........... Utilities 2,460 1,200 840 2,750 13,675 850 Although the unfurnished unit was vacant for 11 wecks during the year, the Wilsons never used the property for personal purposes. When the property is rented, the tenant is required to pay for all utilities, and the Wilsons are charged a management fee equal to 15% of the rents collected. The rental is not a qualified business for purposes of the qualified business income deduc- tion of Section 199A The Wilsons have prepared the following summary of their other expenditures for 2018: j. S 425 1,595 805 (1) 2.750 (2) 1.625 2.100 8.690 410 (4) Prescription medicines and drugs..................... Mecical insurance premiums (paid by Richard ............. Doctors' and hospila bills inet of reimbursements) ............ Dentist Real estate taxes paid on horre........ State income taxes paid curing 2018 ($525 on 4/5,6/5,9/5, and 12/15).. Interest paid for: Original home mortgage ................ Home equity loan (secured by home) ........ Credit card interest ......... Personal car loan ........... Cash contributions to First Presbyterian Church ........ Fee for preparation of 2017 tax return...... (1) Dous not include $11.485 of doctor bills paid by Richard and Anna for medical treatment provided to Anna's mother at the nursing Come Also not included is $115 that Anna paid for a new pair of cycy asses for her mother (2) $2,350 of this amount represents a prepayment of Laura's braces The dentist required the prepayment before he would begin the two year dental program involved. (3) Does not include amounts withheld from Richards wages. (4) Represents interest paid on a $25,000 home couity loan obtained by the Wilsons in 2018 to cotain a new speed boat. (5) $200 is related to preparation of Schedule C. 275 725 1,200 650 6) k. Anna made an $11,500 deductible contribution to her Keogh plan on December 15, 2018. 1. Richard paid the following unreimbursed employee business expenses: $450 Professional dues Professional journals ............ Office gifts to subordinates (none over $25)....................... 385 .. 115 m. During the year, the Wilsons paid tuition of $9.350 and spent $1.875 on books and supplies for Michael's senior year of college. n. The Wilsons received a state income tax refund of $130 in 2018. They had $18,750 of itemized deductions for 2017, and their 2017 taxable income was $52,825. 0. Richard and Anna made timely estimated Federal income tax payments $2,250 each quarter on 4/15/18, 6/15/18, 9/15/18 and 1/15/19 Part 1: Continuous Tax Return Problems p. Social Security numbers for Anna, the children, and Anna's mother are pro vided below: Number Anna K. Wilson .. Michael D. Wilson Lisa M. Wilson.... Laura D. Wilson..... Ruth Knapp ........ 296-48-2385 256-83-4421 257-64-7573 258-34-2894 451-38-3790 q. The Wilsons have always checked the "no" boxes on their Form 1040 regard- ing the Presidential Election Campaign fund contribution. r. Mr. and Mrs. Wilson, along with the children and Mrs. Knapp, were covered by health insurance for the entire year. Required: Complete the Wilsons' Federal income tax return for 2018. If they have a refund due, they would prefer having it credited against their 2019 taxes. OMPREHENSIVE TAX RETURN PROBLEM 3 1. Jane Doe a. Jane Elizabeth Doe, age 58, is single and files as an unmarried taxpayer. Her Social Security Number is 447-45-6789. She does not have any dependents and claims the standard deduction. Her address is 4321 Somewhere Dr.. Indianapolis, IN, 46202. Jane is a florist and owns a chain of highly successful flower shops called Jane's Flowers. She has been in business since 1979. Her florist business is operated as a single-member LLC and is treated as a sole proprietorship for tax purposes. Revenues and expenses from operations for 2018 (exclusive of certain transactions discussed below) were: Sales .. Cost of goods sold....... Other operating expenses.... Net income from operations .. $1,800,000 (600,000) (20,000) $1,180,000 refrigeration equipment (7-year property for ition to the information above, Jane was involved in the following trans- actions related to her flower business. May 7 2018: Purchased used refrigeration equipment (7-Vearn or business. The total cost was $800,000. Jane wants to maximize h base JU W WU Presidential Election is we Yes boxes on their Form 1040. Everyone was overed by health insurance all year. Required: Complete the Holmans Federal income tax return for 2018. If they have a refund they would prefer having it credited against their 2019 taxes. REHENSIVE TAX RETURN PROBLEM 2 Richard M. and Anna K. Wilson a. Richard and Anna Wilson are married and file a joint return. Richard is 47 years of age, and Anna is 46. Richard is employed by Telstar Corporation as its controller, and Anna is self-employed as a travel agent. They have three children: Michael, age 22; Lisa, age 17; and Laura, age 14. Michael is a full- time student at Rutgers University. Lisa and Laura both live at home and attend school full-time. The Wilsons currently live at 3721 Chestnut Ridge Road, Montvale, New Jersey 07645, in a home they have owned since July 2007. Richard and Anna provided over half of the support of Anna's mother, Ruth Knapp, who currently lives in a nursing home in Mahwah, New Jersey. They also provided over half of the support of their son, Michael, who earned $4,750 during the summer as an accounting student intern for a national ac- counting firm. b. Richard received a Form W-2 from his employer reporting the following in- formation for 2018: Richard M. Wilson, Social Security No. 294-38-6249: $63,000 Gross wages and taxable benefits .. 11,400 Federal income taxes withheld.... EL.C.A. taxes withheld: 3,906 Social Security ...... Medicare 1,850 914 State income taxes withheld ....... ate) for Richard's personal use of The taxable benefits reported on his W-2 Form include $2,700 (based currently deductible standard auto mileage rate) for Richard's pers the company car provided by his employer. c. Anna operates her business under the name "Wilson's Travel Agency," located at 7200 Treeline Drive, Montvale, NJ 07645. Anna has one full-time employ- ee, and her Federal employer identification number is 74-2638596. Anna uses the cash method of accounting for her business, and her records for 2018 show the following: $134,000 Fees and commissions...... Expenses: 1,425 Advertising Bank service charges ......... 560 Dues and subscriptions .......... 1,100 Insurance Interest on furniture loan.................... 960 Professional services.................! 700 Officerent........... 6,000 .... 470 Office supplies.............. Meals and entertainment............... 1,700 Payroll taxes ........... 2.170 ........ Utilities and telephone..................... 3.480 Wages paid to full-time employee 22.800 Miscellaneous expenses.............. Meals and entertainment expense of $1.700 included amounts spent for client development of $1.000 for meals and $700 for entertainment. Automobile expenses and amounts paid to her children are not included in the above expenses. Anna paid her daughters Lisa and Laura $750 and $450, respectively, for working part-time during the summer. Since she did not withhold or pay any Federal income or employment taxes on these amounts, Anna is not certain that she is allowed a deduction. She does feel that the amounts paid to her children were reasonable, however, Anna purchased a new 2017 Honda Accord on November 20 of last year, and her lax accountant used the actual cost method in determining the deduct- ible business expenses for her 2017 Federal tax return. Because the deductible amount seemed so small, she is not certain whether she should claim actual expenses (including depreciation), or simply use the automatic mileage meth od. She has the following records relating to the business auto: 20 $26,000 Original cost .... Depreciation claimed in 2017 ($26,000 x 5% = $1,300 x 80% business use) Gas, oil, and repairs in 2018 .................... ........... Parking and toils directly related to her work paid in 2018.. Insurance for 2018........................................................ Interest on car loan for 2018............. 1,040 1.790 410 650 750 Anna drove the auto 20,000 miles for business purposes and 5,000 miles for personal purposes during the year. The above expenses for 2018 have not been reduced to reflect her personal use of the vehicle. On January 7, 2018, Anna purchased the following items for use in her business: Office furniture ......... Copying machine. Dell notebook computer ..................................... Printer Fax machine .................. . . .. $8.900 5,700 1,500 1,600 300 Anna wishes to claim the maximum amount of depreciation deductions or other cost recovery allowed on the office furniture and equipment. 1: Continuous Tax Return Problems d. Richard attended an a in October. He incurred the following accounting convention in Washington, D.C. for three days a incurred the following unreimbursed expenses related to the |-15 trip: fare (round-trip).... Registration fee for meeting Hotel cost ........................... . .............. ................. Meals Taxis ............. Airport parking ..... Road tolls e. Richard and Anna received Forms 1099-INT reporting interest income earned during 2018 from the following: $845 Citibank of Mahwah Montvale National Bank ........ Telstar Employees' Credit Union... 900 f. The Wilsons received the following dividends during 2018: $300 200 Telstar Corporation ... Chevron Corporation These dividends were labeled as "qualified dividends" on the respective Forms 1099-DIV. The Wilsons have never had a foreign bank account or created a foreign trust The Wilsons had the following property transactions for 2018 1. Anna sold 300 shares of Chevron Corporation stock on September 2018. in order to pay for Michael's fall semester of college. She received a check in the amount of $14.950 from Merrill Lynch on September 10, 2018. The stock was from a block of 1,000 shares that Richard and Anna had purchased for $35 per share on February 1, 2005 h. They gave each of the children 100 shares of Chevron stock on December 30, 2018, when the stock was valued at $62.50 per share. The stock was from the same block of stock purchased for $35 per share in February, 2004. No gift taxes were paid on these gifts They gave 100 shares of Chevron stock to Richard's alma mater, Rider University, on December 29, 2018. The average trading price of Chevron stock on that day was $61.25. This stock was also from the original block of 1,000 shares the Wilsons had purchased for $35 per share in 2005. The dress of Rider University is 2083 Lawrenceville Road, Lawrenceville New Jersey 08648. W May 17, 2018 Richard and Anna were notified by the bankruptcy e handling the affairs of Bubbline Crude Oil Company in Houston, ds, that the company's shareholders would not receive anything for judge handling Texas, that their stockow stock ownership because all of the assets were used to satisfy claims creditors. Richard had nurchased 2,000 shares of the stock for 36 per Te on April 1. 2009. Unfortunately, the stock did not meet the require ments of $ 1244 Richard and Anna own a rental condominium located at 7777 Boardwalk in Atlantic City, New Jersey. The unit was purchased on July 29, 2017, for $25,000 cash and a $175,000 mortgage. Of the purchase price, S50,000 was allocated to the land. The following items relate to the rental unit for 2018: $16,400 Gross rents ....... Expenses Management fee Cleaning and maintenance Insurance....... ... Property taxes................... Interest paid on mortgage ........... Utilities 2,460 1,200 840 2,750 13,675 850 Although the unfurnished unit was vacant for 11 wecks during the year, the Wilsons never used the property for personal purposes. When the property is rented, the tenant is required to pay for all utilities, and the Wilsons are charged a management fee equal to 15% of the rents collected. The rental is not a qualified business for purposes of the qualified business income deduc- tion of Section 199A The Wilsons have prepared the following summary of their other expenditures for 2018: j. S 425 1,595 805 (1) 2.750 (2) 1.625 2.100 8.690 410 (4) Prescription medicines and drugs..................... Mecical insurance premiums (paid by Richard ............. Doctors' and hospila bills inet of reimbursements) ............ Dentist Real estate taxes paid on horre........ State income taxes paid curing 2018 ($525 on 4/5,6/5,9/5, and 12/15).. Interest paid for: Original home mortgage ................ Home equity loan (secured by home) ........ Credit card interest ......... Personal car loan ........... Cash contributions to First Presbyterian Church ........ Fee for preparation of 2017 tax return...... (1) Dous not include $11.485 of doctor bills paid by Richard and Anna for medical treatment provided to Anna's mother at the nursing Come Also not included is $115 that Anna paid for a new pair of cycy asses for her mother (2) $2,350 of this amount represents a prepayment of Laura's braces The dentist required the prepayment before he would begin the two year dental program involved. (3) Does not include amounts withheld from Richards wages. (4) Represents interest paid on a $25,000 home couity loan obtained by the Wilsons in 2018 to cotain a new speed boat. (5) $200 is related to preparation of Schedule C. 275 725 1,200 650 6) k. Anna made an $11,500 deductible contribution to her Keogh plan on December 15, 2018. 1. Richard paid the following unreimbursed employee business expenses: $450 Professional dues Professional journals ............ Office gifts to subordinates (none over $25)....................... 385 .. 115 m. During the year, the Wilsons paid tuition of $9.350 and spent $1.875 on books and supplies for Michael's senior year of college. n. The Wilsons received a state income tax refund of $130 in 2018. They had $18,750 of itemized deductions for 2017, and their 2017 taxable income was $52,825. 0. Richard and Anna made timely estimated Federal income tax payments $2,250 each quarter on 4/15/18, 6/15/18, 9/15/18 and 1/15/19 Part 1: Continuous Tax Return Problems p. Social Security numbers for Anna, the children, and Anna's mother are pro vided below: Number Anna K. Wilson .. Michael D. Wilson Lisa M. Wilson.... Laura D. Wilson..... Ruth Knapp ........ 296-48-2385 256-83-4421 257-64-7573 258-34-2894 451-38-3790 q. The Wilsons have always checked the "no" boxes on their Form 1040 regard- ing the Presidential Election Campaign fund contribution. r. Mr. and Mrs. Wilson, along with the children and Mrs. Knapp, were covered by health insurance for the entire year. Required: Complete the Wilsons' Federal income tax return for 2018. If they have a refund due, they would prefer having it credited against their 2019 taxes. OMPREHENSIVE TAX RETURN PROBLEM 3 1. Jane Doe a. Jane Elizabeth Doe, age 58, is single and files as an unmarried taxpayer. Her Social Security Number is 447-45-6789. She does not have any dependents and claims the standard deduction. Her address is 4321 Somewhere Dr.. Indianapolis, IN, 46202. Jane is a florist and owns a chain of highly successful flower shops called Jane's Flowers. She has been in business since 1979. Her florist business is operated as a single-member LLC and is treated as a sole proprietorship for tax purposes. Revenues and expenses from operations for 2018 (exclusive of certain transactions discussed below) were: Sales .. Cost of goods sold....... Other operating expenses.... Net income from operations .. $1,800,000 (600,000) (20,000) $1,180,000 refrigeration equipment (7-year property for ition to the information above, Jane was involved in the following trans- actions related to her flower business. May 7 2018: Purchased used refrigeration equipment (7-Vearn or business. The total cost was $800,000. Jane wants to maximize h base