please help me out this assignment

how to fill out the 1040 form according to the situation

ACCT 604 Final Exam From the information below, prepare the federal tax return for William and Joyce Jones. Attach to your return a statement describing how you treated each of the items listed 1 through 24 below. *** The taxpayers live at 4400 Massachusetts Ave, in Washington, D.C. 20016. William is 53, and Joyce is 51. William is a manager for ABC Corporation, a firm that manufactures and distributes widgets. Joyce is a self-employed author of children's books. The Jones have three children, Will, 21, Dan, 19, and Tom, 16. In February of this year, the Jones provide the following basic information for preparing their prior year federal income tax return. They are on the cash method of accounting and their return is due April 15. They wish to minimize their tax by deferring income and accelerating deductions when possible. Joyce's social security number is 471-42-5207. William's social security number is 150-52-0546. Will Jr's social security number is 372-46-2611. Dan's social security number is 377-42-3411. Tom's social security number is 375-49-6511. The taxpayers do not wish to contribute to the presidential election campaign and have no interest in foreign trusts. *** 1. William's W-2 consists of the following: BOX 1 - Wages $140,000 2 - Withholding 22,000 12c - Group term life insurance in excess of $50,000 100 12d - Contribution to 401(k) plan 7,000 2. The taxpayers received the following interest payments: XYZ Bank of Bermuda ($20,000 balance) New York State Bonds ($20,000 face) $700 600 New York City Bonds ($20,000 face) 1,000 Puerto Rico Bonds ($20,000 face) 500 Ford Motor Bonds ($20,000 face) 600 $120 of back-up withholding was paid to the IRS from the $600 payment. 3. Joyce and her brother are co-workers of, and active participants in, a furniturerestoration business. Joyce owns 30 percent, and her brother owns 70 percent of the business. The business was formed as an S corporation and paid a dividend of $4,800 to Joyce. The basis of Joyce's stock is $31,000. Joyce's share of the corporation's income for the year was $5,000 and her share of the corporation's 179 election was $500. 4. The Jones's received a federal income tax refund of $1,217 on May 12. On May 15, they received a refund from the District of Columbia for $900 which they had deducted on the preceding year's return. 5. Joyce is the lucky caller to a local radio station and wins a tablet. She has not received a 1099-MISC, but in announcing the prize, the radio station host said that the manufacturer's suggested retail price for the tablet is $525. However, Joyce has a catalog from Radio Shack that advertises the tablet for $450. 6. The Jones' receive a Form W-2G for their winnings at a local casino showing gross winnings of $5,000 and $1,200 of withholding tax. Joyce knows she lost at least $6,000 at the casino during the year. 7. Joyce is active in the school PTA. During the year, she receives an award (a plaque and a $100 gift certificate that were donated to the PTA by local merchants) for outstanding service to the organization. 8. As a freelance writer, Joyce incurs costs associated with preparing a manuscript for which she does not yet have a contract. During the year, Joyce makes 4 business trips, each 3 days long, to meet with various publishers. For shorter trips that are closer to home she either drives or takes the train and returns on the same day. In December, Joyce receives an advance on her next book. Under the contract, Joyce is scheduled to begin work on the book the following February, and must have it completed by November. The taxpayers have 2 telephone lines in their home with Joyce having a separate phone number for her business. The information on Joyce's business is listed below. Royalties: West Publishing $4,000 Publishers Advance $5,200 Office Supplies $200 Train Tickets $800 Airfare (4 trips) $2,500 Lodging (12 nights) $3,000 Meals (12 days) $700 Telephone ($100 monthly fee per phone line) $2,400 Parking Tickets $200 Interest on Auto $300 9. In January, Joyce purchases a used car for $15,000 to use in her business. Joyce pays $2,200 in cash and finances the balance through the dealer. During the year, she drives a total of 5,000 miles, 2,000 of which are for business that she has properly documented. She pays $200 for insurance and $500 for gasoline. 10. Joyce's office is located in a separate room of the house and occupies 250 square feet. The total square footage of the house is 2,500. The taxpayers purchased the home in 1999, for $70,000, with approximately 20 percent of the purchase price allocated to the land. The total household expenses for the year are as follows: Heat $2,000 Insurance $1,500 Electricity $700 Repairs to kitchen $3,000 Cleaning $1,000 11. William began work on his MST at American University. He enrolled in two courses and payed $3,200 in tuition and $260 for books. 12. William and Joyce each contribute the maximum to their respective IRA accounts for the year. The IRA account is Joyce's only retirement vehicle. In addition, William and Joyce contributed $2,000 to a Coverdell Education Savings Account for Tom. 13. In June, the taxpayers' 2012 station wagon is totaled during a hurricane. The car was purchased for $28,700. The taxpayers received a check for $21,200 from the Insurance Company that represents the fair market value of the car minus a $750 deductible and they replace the car with a new car costing $31,400. 14. The taxpayers incurred the following medical expenses before receiving $700 reimbursement from their health insurance policy: Medical premiums $7,000 Doctors $5,000 Chiropractor $1,000 Dentist $2,000 Vet Fees (family dog Sandy) $500 Prescription drugs $3,000 Over-the-counter drugs (aspirin, cough syrup) $500 In addition, William purchases a back brace for $700, recommended by his chiropractor, to help strengthen his back muscles. 15. The taxpayers pay the following property taxes: House $9,000 William's car (ad valorem) $500 Joyce's car (ad valorem) $700 16. The taxpayers receive two form 1098s for the interest paid on bank loans. They also pay interest on their personal credit cards. Bank of America 1098 (4400 Mass Ave) $9,000 Sun Trust 1098 (Home Equity) $4,000 Sear's $200 Bank of America Mastercard $150 The proceeds from the home equity loan were used to renovate their kitchen and pay for Tom's tuition at private school. The interest on the portion of the loan used for private school tuition is $1,000. 17. The taxpayers have receipts showing cash contributions to the United Way ($2,000), American University ($3.000), and their local church ($1,000). They also donate the following property to the Salvation Army, at High Street in Washington, D.C., on July 15: PROPERTY ANTIQUE TABLE DISHWASHER SOFA BED FMV (SELF-APPRAISED) $400 $100 $200 ORIGINAL COST $225 $700 $800 DATE ACQUIRED 1/4/02 5/6/06 3/14/08 18. The taxpayers incur the following expenses: TYPE PRIOR YEAR TAX PREPARATION FEE (PAID IN CURRENT YEAR) SAFETY DEPOSIT BOX INVESTMENT JOURNALS INVESTMENT ADVICE BUSINESS PUBLICATION (WILLIAM) AMOUNT $900 $50 $400 $1,200 $700 19. The taxpayers made the following estimated tax payments: DATE FEDERAL D.C. APRIL 15 JUNE 15 SEPTEMBER 15 JANUARY 15 $300 $300 $300 $300 $1,000 $1,000 $1,000 $1,000 20. The taxpayers paid $7,000 in tuition, $800 for books, and $6,000 for room and $5,000 for board for Will Jr., a junior, to attend American University. They also paid $8,000 is tuition, $700 in books, and $5,000 in board for Dan, a freshman at American. 21. In February, William inherits his father's summer home that has a FMV of $540,000 at the date of his father's death. His parents had purchased the house in 1975 for $135,000 and made $75,500 worth of capital improvements to it. Twenty percent of the total value of the property is attributable to land. Because William and Joyce ultimately would like to use the property as a vacation home, they decide to rent it out. William actively participates in the management of the property. The property is first advertised for rent on March 1, but is not rented until April 15. William provides the following income and expense information for the property: Rent $20,000 Repairs $6,000 Management fee $4,000 Property taxes $10,000 Insurance $3,000 In addition, in March William buys a new stove for $2,000 and a new refrigerator for $1,000. 22. The taxpayers receive Form 1099-B totaling $41,000 from Fidelity for the sale of several securities. The selling price listed is net of brokerage commissions and represents the amount the taxpayers receive from the sale. STOCK DATE DATE SOLD SALE PURCHASE ACQUIRED (ALL SALES IN PRICE PRICE 150 SHARES PFIZER 5/12/90 CURRENT YEAR) 8/15 $6000 $* CORPORATION 300 SHARES TEXAS 7/30/95 10/25 $17,000 $ 7,000 INSTRUMENTS 50 SHARES ALCOA 25 SHARES LUMINENT 6/10/07 4/28/Current 10/23 9/4 $500 $900 $2,000 $2,000 60 SHARES TEXTRON Year 9/11/Current 10/27 $10,000 $9,000 300 SHARES HASBRO Year 1/7/02 12/20 $6,000 $7,000 *When Joyce graduated from college, her father gave her 150 shares of the 300 shares of Pfizer Corporation stock that he had acquired on October 27, 1982, for $1,000. At the date of the gift, the fair market value of the stock was $2,000. 23. On May 18, Joyce purchases a computer system for $2,000. She also buys a color printer/copier/fax machine for $500. All the equipment is used exclusively in her business. 24. On June 12, Joyce sells her old computer system for $400 and her printer for $100. She had acquired the computer system and printer on February 18, 2010, for $3,000 and $500, respectively. When the taxpayers prepared their 2010 tax return, they elected to expense the computer and printer using Section 179. The computer system and the printer were used exclusively in her business. Final Problem: Hermione and Sebastian are married and have three children living at home for whom they provided over half of their support: Jeremy, age 21, goes to college full-time and earned $7,000 from his part-time job and $500 in interest income from his savings account; Emma is 19 and earned $19,000 as a secretary; Serena is 15 and is in high school. Serena made $42,000 as a model this year, all of which was put into a trust account except for her manager's fee. Sebastian made $65,000 this year as an engineer and Hermione earned $7,000 as a substitute teacher. If they have $18,000 of itemized deductions and Serena makes a fully deductible contribution to her IRA of $2,000, what is Hermione and Sebastian's gross income, adjusted gross income and taxable income on their joint return this year? Show all calculations and explain fully any assumptions you are making