Tax 315

Tax Return Project

Required:

1. Use the following information to complete Ginger Snaps 2019 tax return. If information is missing, use reasonable assumptions to fill in the gaps.

2. You will need the following forms and schedules to complete the project: Form 1040 (including Schedules 1, 2, and 3), Schedule A, Schedule C, Schedule D, Schedule E, Schedule SE, and Form 4562. Do not complete any forms other than the ones listed (even if the form instructions instruct you to fill out additional forms). The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.

7. When filling out the forms and schedules, leave the cents columns blank; round all amounts to the nearest dollar. Also, do not insert zeros on lines for which there are no entries (unless the instructions specifically direct you to insert a zero); you should merely leave the lines blank. When assembling your return, pay attention to the attachment sequence number in the right-hand corner of each form; that is, you should assemble your completed return based on the attachment sequence numbers.

Taxpayer Information

1. Ginger Snap is single and has one child from her previous marriage, Hannah. Hannah lives with Ginger and Ginger provides more than half of her support. Hannah lived with Ginger for the entire year. Ginger provides you with the following additional information:

• Ginger uses the cash method of accounting and a calendar year for reporting.
• Ginger wishes to contribute to the presidential election campaign.
• Ginger lives at 540 Tessa Drive, Amherst, New York 14120.
• Gingers birthday is 5/31/1980 and her Social Security number is 333-45-6666.
• Hannahs birthday is 10/5/2010 and her Social Security number is 566-77-8888
• Ginger does not have any foreign bank accounts or trusts.
• Ginger will file as Head of Household for 2019.

2. Ginger is employed as a financial consultant with Selective Consulting Services, Inc. Her annual salary is $72,580 Gingers pay stubs indicate that she has $8,250 withheld in federal taxes and $3,387 withheld in state taxes.

3. Ginger owns several investments. She received a statement from her brokerage firm reporting interest and dividends earned on the investments. She also received a statement showing how much interest SHE PAID during the year on her home mortgage.

Dividends Ginger RECEIVED

General Electric Gross dividends $800 (ordinary and qualified)

Interest Ginger RECEIVED

State of Wisconsin bonds Gross interest $500

Ford bonds Gross interest 200

State of Ohio bonds Gross interest 400

Interest Ginger PAID

PNC Bank Mortgage interest $8,900

4. Ginger also owns 1,000 shares of Peacock Oil and Drilling common stock. Peacock (ID # 45-45678900) is organized as an S Corporation and has 100,000 shares outstanding. Peacock reported taxable income of $300,000 and paid a distribution of $1.00 per share. Ginger does not materially participate in Peacocks activities. Ginger received a K-1 from Peacock.

5. Ginger received a Form 1099-B from her broker for the sale of the following securities:

Security	Sale Date	Purchase Date	Sales Price	Gingers Basis
Wisconsin bonds	3/14/19	10/22/13	$8,140	$1,890
IBM Corp (500 shares)	10/20/19	2/19/18	$18,075	$9,760

6. In addition to the taxes withheld from her salary, also made timely estimated federal tax payments of $200 per quarter and timely estimated state income tax payments of $200 per quarter. All payments were made in 2019.

7. In August 2019, Ginger received a federal refund of $580 and a state refund of $160, both related to her 2018 tax returns. Ginger took the standard deduction in 2018.

8. Gingers father died in November, 2018. From her fathers estate, she received her fathers house valued at $90,000 (his basis in the house was $55,000). Local practice is to allocate 12 percent of the fair market value of the property to the land (you will need this information in order to calculate Gingers basis in the house and land). See #9 below.

9. Ginger found a renter for her fathers house on January 1, 2019. Ginger received a total of $11,600 in rental payments in 2019. Ginger provides you with the following additional information for the rental in 2019:

Property taxes	$2,550
Other maintenance expenses	800
Repair expenses	400
Insurance expense	1,200
Management fee	900
Depreciation (to be computed)	???

The rental property is located at 35 Harvest Street, Orono, Maine 04473. Ginger makes all the decisions with respect to the property.

10. Ginger paid $4,050 in real estate taxes on her principal residence.

11. Ginger incurred the following unreimbursed medical costs:

Dentist	$ 310
Doctor	390
Prescription drugs	215
Over-the-counter drugs	140
Optometrist	125
Emergency room charges	440
LASIK eye surgery	2,500
Chiropractor	265

12. On June 14, 2019, Ginger contributed clothing to the Salvation Army. The original cost of the clothing was $740. She has substantiation valuing the donation at $360. The Salvation Army is located at 350 Stone Ridge Road, Amherst, New York 14120. In addition, she made the following cash contributions:

Canisius College	$ 1,850
United Way	125
St. Andrews Church	9,790
Amos House (homeless shelter)	200

* Assume all of the above are qualifying charities.

13. Ginger sells real estate in the evening and on weekends (considered an active trade or business). She runs her business from a rental office she shares with several other realtors (692 River Road, Buffalo, New York 14223. The name of her business is Snap Real Estate and the Federal Identification Number of the business is 05-8799561. Her business code is 531210. Ginger has been operating in a business-like way since 2008 and has always shown a profit. She had the following income and expenses from her business:

Commissions earned	$24,250
Expenses:
Advertising	2,600
Telephone	95
Real estate license	230
Rent	7,000
Utilities	1,450

Ginger uses her automobile, an Acura TL, in her business since July 1, 2018. During 2019, she property documented 6,000 business miles. The total mileage on her car (i.e., business-and-personal-use miles) during the year was 15,000 In 2019, Ginger elects to use the standard mileage method to calculate her car expenses. She also spent $180 on parking related to the real estate business.

14. Ginger has qualifying health insurance for both herself and Hannah for all of 2019.