Note to Instructor. The solutions to these problems are prepared using the tas law as ot December 31, 2017. When 2018 forms and software become available, solations w available reflecting the law as of December 31. 2018, including the Tax Cuts and Jobs Act of 2017 ill be CHAPTER 3: CONTINUOUS TAX RETURN PROBLEMS 3-1 Problem Facts. Larry K. and Cathy L. Zepp have been married 18 years. Larry is 62 years old (Social Security number 433-45-6789) while Cathy is 47 ycars Indi presidential election campaign. Social Security number 433-45-6788). They live at 1234 Elm Dr. in Indianapolis. iana 46202. The couple uses the cash method of accounting and files their return on a calendar-year basis. They are tired of politics and do not want to contribute to the a. Larry is a salesman employed by DSK Industries. This year he earned S120,200 Federal and state income taxes withheld were $17,000 and $7,000 respectively. Social Security tax withheld was $7.452 and Medicare tax withheild was $1,743. b. Cathy recently completed a graduate degree in computer technology. She free- her own namde Her earnings received from various engagements were $12,000. Her only expenses paid during the year were for miscellaneous of- fice supplies of $3,000. She paid estimated federal taxes during the year of S1,000 lances as an independent contractor in computer graphics. She uses as the name of her business. c. Other income earned by the couple included interest income of $4,000 from a certificate of deposit issued by Highland National Bank and $975 of interest from (S250 on each due date). Her business uses the cash method of accounting tax-exempt bonds issued by the State of Indiana. d. The couple contributed S2000 to a Health Savings Account that is fully deductible. e. The couple has adequate health insurance coverage for the entire year The couple owns a duplex that it rents out. It is located at 111 Nowhere Ave.. Indianapolis, Indiana. Their rental records reveal the following information for the year r. 512,000 Rental income Rental experses 400 8.000 1,000 Mortgage interest Real property taxes on rental property g Other expenses paid during the year included 5 9,000 12.000 4,000 7.000 1,000 Uneimbuned medical expenses (doctors, dentst on home mortgage Real property State income taxes withheld (see above axes on home Rental of safety deposit box to bold gold coins held for investment Unembursed employee business expenses of Lay 100 3,000 Prepare the 2017 individual income tax return for the Zepps Complete Form 1040 and Schedules A. B. C, E, and SE. Assume that all of the expenses except their tax Note to Instructor. The solutions to these problems are prepared using the tas law as ot December 31, 2017. When 2018 forms and software become available, solations w available reflecting the law as of December 31. 2018, including the Tax Cuts and Jobs Act of 2017 ill be CHAPTER 3: CONTINUOUS TAX RETURN PROBLEMS 3-1 Problem Facts. Larry K. and Cathy L. Zepp have been married 18 years. Larry is 62 years old (Social Security number 433-45-6789) while Cathy is 47 ycars Indi presidential election campaign. Social Security number 433-45-6788). They live at 1234 Elm Dr. in Indianapolis. iana 46202. The couple uses the cash method of accounting and files their return on a calendar-year basis. They are tired of politics and do not want to contribute to the a. Larry is a salesman employed by DSK Industries. This year he earned S120,200 Federal and state income taxes withheld were $17,000 and $7,000 respectively. Social Security tax withheld was $7.452 and Medicare tax withheild was $1,743. b. Cathy recently completed a graduate degree in computer technology. She free- her own namde Her earnings received from various engagements were $12,000. Her only expenses paid during the year were for miscellaneous of- fice supplies of $3,000. She paid estimated federal taxes during the year of S1,000 lances as an independent contractor in computer graphics. She uses as the name of her business. c. Other income earned by the couple included interest income of $4,000 from a certificate of deposit issued by Highland National Bank and $975 of interest from (S250 on each due date). Her business uses the cash method of accounting tax-exempt bonds issued by the State of Indiana. d. The couple contributed S2000 to a Health Savings Account that is fully deductible. e. The couple has adequate health insurance coverage for the entire year The couple owns a duplex that it rents out. It is located at 111 Nowhere Ave.. Indianapolis, Indiana. Their rental records reveal the following information for the year r. 512,000 Rental income Rental experses 400 8.000 1,000 Mortgage interest Real property taxes on rental property g Other expenses paid during the year included 5 9,000 12.000 4,000 7.000 1,000 Uneimbuned medical expenses (doctors, dentst on home mortgage Real property State income taxes withheld (see above axes on home Rental of safety deposit box to bold gold coins held for investment Unembursed employee business expenses of Lay 100 3,000 Prepare the 2017 individual income tax return for the Zepps Complete Form 1040 and Schedules A. B. C, E, and SE. Assume that all of the expenses except their tax
