Tax 3361 Individual Income Taxes

Tax Return Project

Prepare a 2019 individual tax return using the following fact pattern. Compute net tax payable or refund due for Alice and Bruce Byrd for 2019.

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their social security numbers are 123-45-6789 and 111-11-1111, respectively. Alices birthday is September 21, 1968 and Bruces is June 27, 1962. They live at 473 Revere Avenue, Newtown, NY 10187. Alice is the office manager for Ames Dental Clinic, 433 Broad Street. Newtown, NY 10187(employer identification number 98-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247 Central Avenue, Hauppauge, NY 11788(employer identification number 11-1111111). He is also a self -employed attorney and has a part time practice.

The following information is shown on their Wage and Tax Statements (Form W-2) for 2019.

Line Description Alice Bruce

1. Wages, tips and other compensation $52,600 $61,500
2. Federal income tax withheld 4,180 5,990
3. Social Security wages 52,600 61,500
4. Social Security tax withheld 3,261 3,813
5. Medicare wages and tips 52,600 61,500
6. Medicare tax withheld 763 892

15. State NY NY

16. State wages, tips, etc. 52,600 61,500

17. State income tax withheld 2,280 2,990

The following information is for Bruces law practice:

Income $60,000

Utilities $3,000

Rent $12,000

Supplies. $5,000

Salaries $10,000

Disbursements $3,000

The Byrds support their two children, Cynthia (born January 15, 2006, Social Security number 123-45-6788) and John (born February 7, 2008, Social Security number 123-45-6786)..

During 2019, the Byrds furnished 60% of the total support of Bruces widower father, Sam Byrd (born March 6, 1934, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his social security benefits. Sam died in November and Bruce, the beneficiary of a policy on Sams life, received life insurance proceeds of $600,000 on December 28^th.

The Byrds had the following expenses relating to their personal residence during 2019:

Property taxes $10,720

Qualified interest on home mortgage 9,130

Repairs to roof 4,780

Utilities 3,810

Fire and theft insurance 2,290

The following facts relate to medical expenses for 2019:

Medical insurance premiums $4,380

Doctor bill for Sam incurred in 2018 and not paid until 2019 7,760

Operation for Sam 7,310

Prescription medicines for Sam 860

Hospital expenses for Sam 2,850

Reimbursement from insurance company, received in 2019 3,000

The medical expenses for Sam represent most of the 60% Bruce contributed toward his fathers support.

They also engaged in a few stock transactions. They sold 100 shares of Green Company Stock for $10,000 on February 15, 2019. Their cost basis is $2,000. They had purchased the stock on March 15, 2009. They sold 50 shares of Orange Company Stock for $8,000 on March 3, 2019. They had purchased the stock on December 20, 1017 for $12,000.

Other relevant information follows:

• When they filed their 2018 state return in 2019, the Byrds paid additional state income taxes of $950.
• During 2019, Alice and Bruce attended a dinner dance sponsored by the Ames Police Disability Association (a qualified charitable organization). The Byrds paid $400 for the tickets. The cost of comparable entertainment would normally be $160.
• The Byrds contributed $4,800 to Ames Presbyterian Church and gave used clothing(cost of $1,100 and fair market value of $450) to the Salvation Army. All donations are supported by receipts and are in very good condition.
• In 2019, the Byrds received interest income of $2,695, which was reported on a Form 1099-INT from Second National Bank.
• Bruce paid $320 for an annual subscription to the Journal of Franchise Management.

Instructions:

Prepare a 2019 Form 1040. All corresponding schedules are required. The return may be prepared with any tax software as long as it is current. It must be typed.