Prepare the 2019 Federal income tax return for the Butlers. Additionally, answer the questions above.
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Normally interest and capital gains would require additional forms (Schedule B and Schedule D). However for this assignment do not prepare those forms/schedules, simply enter the appropriate amount directly onto form 1040 or Schedule 1.
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If the taxpayer itemizes the total from Schedule A needs agree with line 9 (form 1040). Prepare the Schedule A regardless of whether or not the taxpayer itemizes.
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Taxpayers will deduct either their state tax payments (i.e. state tax withholding) or sales tax, but not both. For this tax return, ignore sales tax (generally, sales tax only applies in states with no personal state income tax, such as Texas, Florida, etc.).
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Assume that the Butlers had adequate health insurance coverage.
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8) Ignore any tax credits (including child tax credit, EITC, and education credits, etc.).
Daniel B Butler and Freida C. Butler, husband and wife, file a joint return. The butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6789. Dan was born on January 15, 1968, and Freida was born on August 20, 1968. During 2019, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home. a) Gina, their daughter, age 22, a full-time college student, has no income of her own. Gina's Social Security number is 123-45-6788. b) Sam, their son, age 19, who had gross income of $6,300. He graduated from high school on May 15th 2019, Started College on August 21st 2019, then dropped out of college in September 2019. Sam's Social Security number is 123-45-6787. c) Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786. Dan was employed as a manager by WJJJ, Inc. (employer identification number 11- 1111111, 604 Franklin street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, KY 40701). Selected information from the W-2 Forms provided by the employers is presented below. Dan and Freida use the cash method. Line Description Dan Freida 1 Wages, tips, other compensation $74,000 $86,000 Federal income tax withheld 11,000 11,400 17 State income tax withheld 3,960 4,540 Freida sold a house (as part of her job as a real estate agent) on December 30, 2019, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 5, 2020 closing date. The Butlers also had: (1) $1,600 in interest income from their savings account 2) Freida made a $5,000 contribution to her traditional IRA. (assume fully deductible) Sale of ABC stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on 1/15/2015) Sale of XYZ stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on 12/15/2018) Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally purchased for $20,000 on 6/15/2014) Interest on the Butlers personal residence is $6,000 (Assume this is tax deductible) (7) The Butlers paid $5,500 in property taxes on their primary residence (8) The Butlers made a $6,000 cash contribution to a qualified charitable organization (9) Daniel inherited publically traded stock worth $30,000 from a deceased uncle on September 30, 2019. (10) Immediately after receiving this stock, Daniel sold it for $30,000. This stock was originally purchased by his uncle on January 15th, 2016 for $23,000. Additional Questions: The Butlers had considered making an additional tax-deductible contribution of $3,000 to a non-profit organization (in addition to their actual $6,000 contribution). (1) If they had made that contribution, what would have been the effect on their taxable income? (2) If they had made that contribution, what would have been their tax savings (i.e. their tax benefit)? (3) Two things occurred relating to the stock received from Daniels deceased uncle (1) the stock was received, and (2) the stock was sold. Explain how both of these items affected Daniels income tax return. (2) Form 1040, (3) Schedule 1, (4) Schedule A (even if not required, must be filled out), (5) calculation of Capital gain (including LT or ST), (6) calculation of tax, and (7) the answers to the questions above (show your calculation and add an explanation). Hints: 1) Don't forget to check the box for the filing status 2) Review the rules as for what qualifies as a "student" for purposes of the Qualifying Child tests. See IRS publication 501 page 12. 3) Make sure you are using 2019 information (i.e. personal exemptions, standard deduction, tax brackets etc.). 4) Normally interest and capital gains would require additional forms (Schedule B and Schedule D). However for this assignment do not prepare those forms/schedules, simply enter the appropriate amount directly onto form 1040 or Schedule 1. 5) If the taxpayer itemizes the total from Schedule A needs agree with line 9 (form 1040). Prepare the Schedule A regardless of whether or not the taxpayer itemizes. 6) Taxpayers will deduct either their state tax payments (i.e. state tax withholding) or sales tax, but not both. For this tax return, ignore sales tax (generally, sales tax only applies in states with no personal state income tax, such as Texas, Florida, etc.). 7) Assume that the Butlers had adequate health insurance coverage. 8) Ignore any tax credits (including child tax credit, EITC, and education credits, etc.). 9) The taxpayer has a refund. Daniel B Butler and Freida C. Butler, husband and wife, file a joint return. The butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6789. Dan was born on January 15, 1968, and Freida was born on August 20, 1968. During 2019, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home. a) Gina, their daughter, age 22, a full-time college student, has no income of her own. Gina's Social Security number is 123-45-6788. b) Sam, their son, age 19, who had gross income of $6,300. He graduated from high school on May 15th 2019, Started College on August 21st 2019, then dropped out of college in September 2019. Sam's Social Security number is 123-45-6787. c) Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786. Dan was employed as a manager by WJJJ, Inc. (employer identification number 11- 1111111, 604 Franklin street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, KY 40701). Selected information from the W-2 Forms provided by the employers is presented below. Dan and Freida use the cash method. Line Description Dan Freida 1 Wages, tips, other compensation $74,000 $86,000 Federal income tax withheld 11,000 11,400 17 State income tax withheld 3,960 4,540 Freida sold a house (as part of her job as a real estate agent) on December 30, 2019, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 5, 2020 closing date. The Butlers also had: (1) $1,600 in interest income from their savings account 2) Freida made a $5,000 contribution to her traditional IRA. (assume fully deductible) Sale of ABC stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on 1/15/2015) Sale of XYZ stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on 12/15/2018) Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally purchased for $20,000 on 6/15/2014) Interest on the Butlers personal residence is $6,000 (Assume this is tax deductible) (7) The Butlers paid $5,500 in property taxes on their primary residence (8) The Butlers made a $6,000 cash contribution to a qualified charitable organization (9) Daniel inherited publically traded stock worth $30,000 from a deceased uncle on September 30, 2019. (10) Immediately after receiving this stock, Daniel sold it for $30,000. This stock was originally purchased by his uncle on January 15th, 2016 for $23,000. Additional Questions: The Butlers had considered making an additional tax-deductible contribution of $3,000 to a non-profit organization (in addition to their actual $6,000 contribution). (1) If they had made that contribution, what would have been the effect on their taxable income? (2) If they had made that contribution, what would have been their tax savings (i.e. their tax benefit)? (3) Two things occurred relating to the stock received from Daniels deceased uncle (1) the stock was received, and (2) the stock was sold. Explain how both of these items affected Daniels income tax return. (2) Form 1040, (3) Schedule 1, (4) Schedule A (even if not required, must be filled out), (5) calculation of Capital gain (including LT or ST), (6) calculation of tax, and (7) the answers to the questions above (show your calculation and add an explanation). Hints: 1) Don't forget to check the box for the filing status 2) Review the rules as for what qualifies as a "student" for purposes of the Qualifying Child tests. See IRS publication 501 page 12. 3) Make sure you are using 2019 information (i.e. personal exemptions, standard deduction, tax brackets etc.). 4) Normally interest and capital gains would require additional forms (Schedule B and Schedule D). However for this assignment do not prepare those forms/schedules, simply enter the appropriate amount directly onto form 1040 or Schedule 1. 5) If the taxpayer itemizes the total from Schedule A needs agree with line 9 (form 1040). Prepare the Schedule A regardless of whether or not the taxpayer itemizes. 6) Taxpayers will deduct either their state tax payments (i.e. state tax withholding) or sales tax, but not both. For this tax return, ignore sales tax (generally, sales tax only applies in states with no personal state income tax, such as Texas, Florida, etc.). 7) Assume that the Butlers had adequate health insurance coverage. 8) Ignore any tax credits (including child tax credit, EITC, and education credits, etc.). 9) The taxpayer has a refund
