PART ONE Albert [last name of student completing assignment] and his wife Allison [last name of student completing assignment] are married and file a joint return for the current year. Albert's Social Security number is [266-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem] and he is 49 years old. Allison's Social Security number is [266-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem] and she is 48 years old. They live at [choose a street address], Coral Gables, FL 33134. Albert is a charter fishing boat captain and he took six months off work to train and study for his Masters Captain's License. His current year Form W-2 from his job at CGFC, Inc., (EIN is 11-1111111) showed the following: . . Wages $66,850 Withholding (federal income tax) $5,780 Albert and Allison have a 17-year-old son, Crocker [last name of student completing assignment], who is enrolled as a freshman in BSU, a community college. He started in August. Crocker's Social Security number is [266-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem]. Albert and Allison also have an 18-year-old daughter, Cayman Ross, who is a part-time freshman Student at a Community College, DCCC. Cayman's Social Security number is [266-X the X this social from other indivi s SSN i his problem]. Cayman is married to Boss Ross, who is 19 years old and a part-time student at DCCC. Boss's Social Security Number is [266-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem]. Boss and Cayman have a 1-year-old child, Sauce Ross. Sauce's Social Security Number is 1266-XX- XXXX: choose the this social securi ber but make sure s different from other ndividual's SSN this problem]. Boss, Cayman, and Sauce all live in an apartment up the street from Albert and Allison during the entire current calendar year. Boss and Cayman both work for Boss's wealthy grandfather as apprentices in his business. Their wages for the year were a combined $50,000, which allowed them to pay all the personal expenses for themselves and their child, Sauce Ross. Albert and Allison paid tuition and fees for Crocker to attend the community college. Crocker is a full time student, and Albert and Allison pay $3,700 for Crocker's tuition and books. The rest of the tuition and books are covered by a $1,000 scholarship. BSU's address is [choose a street address], Key Biscayne, FL 33149. BSU's EIN is EIN number 44-4444444. In December last year, Albert's 82-year aunt, Virginia [last name of student completing assignment] (Social Security Number [699-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem]), was unable to support herself and moved in with Albert and Allison. She lived with them for all of the current year. Albert and Allison provide over one-half of the Aunt's support. The aunt's only source ofincome is a small annuity that paid her $3,100 in the current year. Albert and Allison hired a nanny service Nannys R Us in the year to take care of the aunt. Albert and Allison paid $3,400 to Nannys R Us in the current year. Nannys R Us EIN is 34-1234123 and is located at [choose a street address], Miami, FL 33133. Albert and Allison have the following investment income: Dividends (qualified) on Everglades Bank stock $1025 . . . Dividends (nonqualified) from Grapefruit Mutual Fund $160 Interest on Miami-Dade County Municipal Bonds $745 Interest on FL Electric Company Bonds $670 . Interest on VNB Savings Account $336 Albert went to the local Mikkosukee Indian casino and won $6,000 total during the year playing Keno many times. Albert did not receive any documentation, but does know that the casino withheld $1,600. Mikkosukee Indian Casino's EIN is EIN number 55-5555555. Albert managed to gather his gambling loss documentation and can substantiate gambling losses of $3,480 in the current year. In February, Allison received $50,000 in life insurance proceeds from the death of her friend Linda. In July, Albert's Uncle Larry died and left him real estate (undeveloped land) worth $72,000. Five years ago, Albert and Allison were divorced. Albert married Iris [last name of student completing assignment], but that marriage did not work out and they were divorced a year later. Under their divorce decree, Albert pays Iris $11,500 per year alimony. All payments were made on time during the current year. Iris's Social Security number is [266-XX-XXXX: choose the X's in this social security number but make sure it is different from other individual's SSN in this problem]. Three years ago, Albert and Allison were remarried. CGFC, Inc. pays Albert's captain's license fees and membership dues to the Charter Fisherman's Association. During the current year, CGFC, Inc. paid $1,300 for such dues and fees for Albert. CGFC, Inc. also pays for Albert's parking at the marina. The monthly cost of the parking is $120. Allison was laid off from her job on January 2nd of the current year. For the current year, she received $4,000 in unemployment benefits ($150 of federal income tax was withheld on this amount). Albert and his family are covered the full year by an employer-sponsored health insurance plan at work. CGFC, Inc. pays $700 per month premiums for Albert and his family. During the year, Allison was in the hospital for a few days to have her appendix removed. The bill for the surgery was $10,100 of which the health insurance plan reimbursed Albert the full $10, 100.PART TWO On September 1, Allison opened a retail store that specializes in sports car accessories. The name of the business and store is PTC. The store is located at [choose a street address], Key Biscayne. FL 33149. The store uses the cash method of accounting and the EIN number is 88- 8888888. Note that this activity is considered a qualied trade or business for the qualied business income deduction calculation. Her income and expenses for the year are as follows: 0 Sales of merchandise $84,050 0 Inventory, September 1 (purchased in August) $40,100 0 Inventory, December 31 $38,000 0 Purchases during the year $37,800 0 Sales returns and allowances $700 o Store rental $7,505 0 Ofce expense $1,380 o Insurance $780 0 Fine for oil spill $900 o Advertising $3,105 0 Employee wages $3,400 . Payroll and other business taxes $510 0 Interest on bank loan to open store $1,750 o Accounting Fees $315 0 Business Gifts $180 o Supplies $630 0 Utilities $975 o Uniforms (they leave at business) $400 0 Telephone $800 0 Maintenance $437 0 Miscellaneous $73 In addition to the above items. Allison incurred travel expenses to attend a seminar on sports car accessories. She spent $300 on airfare. $550 on lodging. and $90 on a rental car, and $150 on meals. Allison has proper receipts for these amounts. A review of the gift account details shows that Allison gave a $30 gift to each of her six best suppliers. The supplies expense account detail reects the purchase of 250 pens with the "PTC" logo inscribed on each pen. Allison gave the pens away to suppliers, customers, and other business contacts before the end of the year. Uniforms expense reects the cost to purchase polo shirts Allison provided for each employee (but not herself). The shirts have the PTC logo printed on the front and back and are the required apparel while working but othenivise are just like any other polo shirts. Allison drove her 2010 Ford Explorer 1,701 miles for business (since the start of the business) related to PTC. The Explorer was driven a total of 11,450 miles for the year. Included in the total 11,450 miles is 5,000 miles spent commuting to the store. Allison has the required substantiation for this business mileage. She uses the standard mileage method. On September 14th of the current year, Allison bought a building for her store. She paid $330,000 total (the $330,000 is allocated $230,000 for the building and $100,000 for the land). Allison's store is the only business in the building. In July, Albert loaned a friend $7,000 so he could buy a car. Albert's friend lost his job in the current year and stopped making payments on the loan. He plans to start making payments again, however, with additional interest as soon as he has new employment. In the current year, Albert started to mount and stuff some of his trophy sh to display in his "man cave" at the home. Some of his friends liked Albert's taxidermy work and asked him to prepare a couple of trophy sh for them as well. Although he doubts he will ever sell any more stuffed sh, he was paid $150 and had no expenses related to this activity in the current year. Albert and Allison own a rental beach house in Hawaii. The beach house was rented for the full year during the current year and was not used by the Albert and Allison during the year. Albert and Allison were active participants in the management of the rental. Note that this activity is considered a qualied trade or business for the qualied business income deduction calculation. Pertinent information about the rental house is as follows: Address: _, Lihue, HI 96766 a Rental income $20,000 a Mortgage interest $7,850 . Real estate taxes $2,250 . Utilities $2,100 a Maintenance $2,400 The rental house is fully depreciated so there is no depreciation expense. There was no 1099-K or other tax documentation received regarding the rental activity. For the current tax year, on April 15th of the following year, Albert contributes $5,500 to a traditional IRA for himself and $5,500 to a traditional IRA for his wife. He is not covered by a qualied retirement plan at work. Albert and Allison paid the following in the current year (all by check or can otherwise be substantiated): 0 Contributions to Perpetual Perpetuity Catholic Church $510 0 Tuition to Perpetual Perpetuity Catholic School for Crocker (he graduated in May)$6,000 0 Clothes to Salvation Army (10 bags in good condition) $275 0 Contributions to George Kerry's Congressional campaign $250 . Psychotherapy for Allison $2,210 o Prescription Eyeglasses for Crocker $364 0 Prescription medication and drugs $1,850 0 Credit card interest $1,345 0 Interest on Albert's qualied college loans $3,125 0 Actual state sales tax (including sales tax on new auto of $2,000) $3,100 0 Investment interest expense on loan used to acquire FL Electric Company Bonds $345 0 Auto loan interest (auto was paid for by a home equity loan on residence) $860 0 Auto insurance $1,600 0 Cosmetic surgery for Albert $4,500 0 Dave Deduction, CPA, for preparation of last year's tax return $765 0 Safe-deposit box for storage of stocks and tax data $100 0 Contribution to an educational savings account for Crocker $1,000 0 Home mortgage interest which is all qualied as deductible acquisition debt $20,900 0 Home property taxes $4,600 0 Unreimbursed business expense (seminar on hijacking at sea) $700 In June of the current year Albert purchased a new professional SLR camera for $7,950. While Albert and Allison were on vacation in August of the current year someone broke into their residence and stole the camera. Albert's homeowners' insurance did not reimburse him for any part of the loss since he declined the special premium add-on for high value items required by his policy. In August of the current year, Crocker was on an out-of-town eld trip with the high school band (as a friend of the band, not a student) and his appendix burst. He required immediate surgery which was considered "out of network\" for the family's health plan resulting in hospital and doctor's fees of $3.000 not covered by insurance. In addition, Allison drove 300 miles to be with Crocker after the surgery and drive him home after he recovered. She spent two nights in a hotel at a cost of $140 per night. All home mortgage interest paid above is shown on a Form 1098 and reected on Box 1 as qualied home acquisition indebtedness that is deductible. PART THREE Albert sold the following securities during the year and received a Form 1099-3 that showed the following information: Security Description Date Date Selling Adjusted Acquired Sold Price Basis Orange, Inc. 100 Shares 02I11100 04MB $3.050 $2.150 Common this year Banana. Inc. 100 Shares 07717304 07731 2.000 4,200 Common this year Grape, Corp. 100 Shares 12:08 09:25 9.000 10.500 Preferred last year this year Plum. Inc. 5 Bonds that 12l30!08 01l02 5.200 5,400 mature in 3 years this year Peach Mutual 5.010.150 Shares 054130109 10322 60.100 56.000 Fund this year The selling price given is net of sales commissions. In addition to the above amounts. the Grapefruit mutual fund (mentioned on page 1) distributed a long-term capital gain of $450 on December 30th of the current year. Albert owned 1.000 shares of Behemoth Airline stock with a basis of $30 per share. The stock was purchased 6 years ago on June 10. Albert sells 500 shares of Behemoth stock to his uncle Seth for $5 per share and 500 of the shares to his sister Sara for $5 per share on December 31 st of the current year. On January 12 the of current year, Albert and Allison sold their personal residence for $715,150 and purchased a new house for $725,000. The old house cost $120,000 back in January of 2006 and they added on a new bedroom and bathroom a few years ago for a cost of $20,000. They also built a pool for a cost of $60.000. The house had been their personal residence for all the years they were married. They moved into the new house on January 19th of the current yeah