Prepare a tax return for the relevant information and supporting documents.

BSAD 196 - Individual Taxation Comprehensive Return II Spring 2016 This assignment requires that you individually (i.e., no group work) prepare a tax return (including accompanying schedules and forms as applicable) for individual taxpayers. In connection with the preparation of the tax return, you need to provide typed responses/calculations that explain (i) why certain transactions are not directly reflected on the return and (ii) any treatment on the return that is not apparent from the face of the return. For example, a typed response/calculation would be needed to explain that a loss from a sale of personal-use property is not included on the tax return. Similarly, if the facts state that there is a $100 loss but you report an $80 loss on the return after properly applying a rule that limits the loss to $80, then you need to explain how/why you applied the rule. The explanations should provide enough detail to explain your rationale for the treatment of those items, including any assumptions, such that someone unfamiliar with the transactions could follow and understand your technical analysis. Do not assume that I can read your mind or that I will recalculate your numbers to find support for your conclusions. You must submit a hard copy of your materials by 1:30 PM on May 13, 2016. Use only 2015 forms and schedules to prepare your return (the 2015 date should appear on the top right-hand corners of forms and schedules). Assemble your tax return by placing the Form 1040 on top and then, below it, place any other schedules and forms in the ascending order of the Attachment Sequence Numbers appearing in the top right-hand corners of those schedules and forms. Do not prepare a Form W-2 or a Form 1099, which an employer, bank, etc. prepares and provides to an individual and which are not part of the individual's tax return. In preparing the tax return, you may use any tax return preparation software and/or complete paper copies of the tax return. Tax returns/forms, as well as instructions, are available on the Internal Revenue Service website at www.irs.gov. A tax return with legible, handwritten entries is acceptable for this assignment. You may use your textbook (and supplemental readings), notes, and other written materials in preparing the return (e.g., other students in the class or professionals). Assume that you are the paid tax return preparer for the taxpayers. The following pages provide factual information about the individuals as well as additional instructions for this assignment. Additional information appears in the accompanying pdf file of tax documentation. Please read through the entire factual description before attempting to address the requirements. To avoid becoming overwhelmed by this assignment, you should identify and approach single issues in a methodical manner in order to make this assignment more manageable. Unless otherwise noted, assume all of the described events occurred during 2015 and all taxpayers use a calendar year for tax purposes. Keep in mind that the purpose of this assignment is to enhance your learning through application of concepts, principles, and provisions of the tax Code. This is not an exercise to determine how well you can regurgitate rules. Instead, the assignment is intended to help you think about how the tax Code applies to transactions that often interact with other transactions. BSAD 196 - Individual Taxation Page 2 Spring 2016 Amanda Smith (social security number 299-81-6476) was born on November 17, 1961. Amanda started 2015 living in Brattleboro, VT, where she worked at Knight Corp. (\"Knight\"). Amanda realized that Knight was having financial trouble, so she began looking for a similar position in her same field at another company. Unfortunately, before she could find a new job, Amanda was laid off by Knight. Amanda was able to collect unemployment compensation while being laid off. Amanda was out of work for a few months before she accepted a full-time job at Institutional Lighting Ltd. (\"Lighting\"). The new job was located in Burlington, VT, so she moved into a rental apartment on King Street on May 9, 2015. Amanda had paid $94 at a hotel and drove 151 miles from Brattleboro to Burlington while looking for an apartment to rent. She then paid $154 for packing supplies, $460 in rent for a moving truck, $30 for gas for the truck, $104 for meals while her kitchen was packed, $29 for premiums to insure her belongings during the move, and $250 for the services of college students who did the heavy lifting during the move. Amanda drove the moving truck from Brattleboro to Burlington while SandraAmanda's oldest childdrove behind in Amanda's personal car with SallyAmanda's youngest childand with Nickthe son of Amanda's cousin. Amanda moved out of the house that she owned on Frost Street in Brattleboro. She had lived there for many years. She had acquired ownership of the house in 2013 as part of her divorce from Bob Smith (social security number 759-94-3145) in 2013. Bob originally purchased the house on April 6, 2008, and Amanda and Bob both lived in the house until their divorce and Amanda lived in the house after the divorce. Bob's accountant determined that Bob had a $209,000 adjusted basis in the house at the time of the divorce. Amanda was relieved to sell the house after she moved out. The sale allowed her to get rid of her monthly payments to a credit union for the principal and interest on a mortgage and for escrowed amounts for homeowner's insurance and real estate taxes. Amanda is happy to rent a place now on King Street in Burlington. In addition to transferring ownership in the house to Amandawhen the house was worth $455,000 Bob also paid $61,980 in alimony and $820 in child support payments to Amanda in 2013 pursuant to their divorce decree. In 2014, Bob transferred ownership in 144 shares of Eplison Ltd. stockwhen the stock was worth $7,056to Amanda and paid $50,760 in alimony and $860 in child support payments to Amanda pursuant to their divorce decree. Bob had purchased the 144 shares of Eplison stock on June 12, 2007, for $3,456 and paid a $242 commission in the transaction. Amanda incurred a $279 commission from her broker when she sold that stock during 2015. Finally, Bob initially paid $900 in child support payments to Amanda in 2015 but he refused to make the required alimony payments. Consequently, Amanda paid an attorney $2,760 in 2015 to sue Bob, and she eventually received $27,600 in alimony payments from Bob by the end of 2015. Bob made child support payments because Amanda had sole custody of their two children: Sally Smith (social security number 467-69-2279), who was born on June 1, 1999, and Sandra Smith (social security number 724-76-9694), who was born on July 6, 1997. Both children lived in the Brattleboro house and moved with Amanda to the Burlington apartment. Although Sally lived with Amanda for the entire year, Sandra moved into college dorms on June 1, 2015, when she took a summer course to start her undergraduate degree. Sandra has lived in the dorms ever since while pursuing her degree as a full-time student. Although Amanda was still paying off her own student loans and paid $248 in credit card interest from unrelated charges, she managed to help Sandra pay some of her college costs. Sandra's tuition and fees were $1,200 for the summer course and is $12,000 per semester during the regular academic year. Her BSAD 196 - Individual Taxation Page 3 Spring 2016 room and board totaled $7,170 for the summer and fall semester. Fortunately, Sandra received a $10,050 scholarship that was applied to her fall tuition and fees, so Bob paid $1,890 of Sandra's total tuition and fees and Amanda paid the remaining amount of $1,260 during 2015. Bob also paid the room and board costs during 2015, and Sandra used $650 (of the $5,480 she earned at a part-time job) to pay for her books. Sandra saved the rest of her earnings and will use them to buy a car in the future. Amanda got some of the cash to pay her share of the tuition and fees by selling a rental house and land that she purchased on July 8, 2011, for $300,000. The house, which was located on High Street in Brattleboro, had been rented since Amanda acquired it. She rented it continually through May 31, 2015, and then the tenants moved out and she sold the house on June 18, 2015, for $253,150 in cash. The tenants paid $2,160 in rent on the first day of each month during 2015. In 2015, in connection with renting the house, Amanda paid $364 for insurance, $603 for snow removal, and $5,100 in real estate taxes. She has appraisals to show that 10% of the total purchase and sale prices were attributable to the land and 90% were attributable to the house itself. Amanda has receipts to show that she contributed $120 to the American Red Cross, $2,200 to her individual retirement account, and $136 to the American Humane Society during 2015. Amanda's 2014 federal income tax return showed an $8,098 tax liability for 2014, and she paid $696 of that liability on April 15, 2015, as the amount she still owed when she filed the return. Amanda's 2014 Vermont state income tax return showed a $2,958 tax liability for 2014, and she paid $708 of that liability on April 15, 2015, as the amount she still owed when she filed the return. Amanda was concerned that she might owe more taxes in 2015 as a result of selling her rental house. Therefore, she made: (1) a $150 estimated federal income tax payment and $400 estimated state income tax payment on June 15, 2015; (2) a $200 estimated federal income tax payment and $400 estimated state income tax payment on September 15, 2015; and (3) a $250 estimated federal income tax payment and $400 estimated state income tax payment on January 16, 2016. Amanda paid $180 on May 1, 2015, for the preparation of her 2014 tax returns and expects to pay you $200 for the preparation of her 2015 federal income tax return. Nick Carlton (social security number 651-22-7947), the son of Amanda's cousin (i.e., Amanda's first cousin once removed), lived with Amanda and her children during 2015. Amanda agreed to let Nick live with her after Nick and Nick's parent (Amanda's cousin) could not reconcile after a dispute about bedtimes, chores, and other grievances. Amanda paid all of Nick's costs and took care of him while Nick lived with her. Nick was born on February 11, 2008, and had only $54 of interest income for 2015. As part of her job duties with Knight and Lighting, Amanda had to visit various client sites. She used her personal car (which she purchased on November 11, 2011) to drive 2,263 miles between her employers' offices and the client sites; 1,669 miles between her employers' offices and her residences; and 16,139 miles for errands, vacations, and other personal purposes. She paid $354 on a data plan for use on her client visits, $167 on hotel rooms while visiting clients for multiple days, $36 on parking at client sites, and $80 on dinners while staying overnight near the client sites. Nether Knight nor Lighting was willing to reimburse Amanda for her out-of-pocket costs. Required: Earn the accounting fee. Use the facts above and the accompanying tax documentation file to complete Amanda Smith's 2015 federal income tax return (Form 1040), which might require the use of Schedule A, Schedule B, Schedule D, Form 8949, Schedule E, Form 4797 (rental house), Form 6251, Form 8812, Form 8863, Form 2106-EZ, and/or Form 3903. Despite the May 13 due date for this assignment, assume Amanda will file her 2015 return on time