TAX FORM PROJECT

Client Facts:

Nick M. Viall and Rachel A. Lindsay, husband and wife, file a joint return. They live at 113 Bachelor Way,

Austin, TX. 42871. Nick's Social Security number is 234-56-7809, and Rachel's is 987-56-4321. Nick was born on November 12, 1956, and Rachel was born on September 25, 1962. Nick and Rachel file a joint tax return. Nick retired from ABC Medical, and Rachel works part-time as an accountant.

Nick and Rachel had the following gross income for 2018:

Rachel earned a salary of $40,000 working part-time as a tax-accountant during busy season.

Interest income of $22,000 from various corporate bond investments.

Interest income of $10,000 from bonds issued by the city of Austin.

Other information that affects their tax return for the year is as follows:

Rachel had $6,000 Federal tax withheld from her paycheck during the year and $2,500 in state income

taxes withheld.

The couple had other expenses that were all paid in 2018, which they told you may qualify as itemized

deductions:

- Property taxes on their home - $7,750

- Mortgage interest - $18,000 (acquisition indebtedness; balance of $450,000 at the end of the year)

- Charitable contribution (cash) -$3,000 (to Trump Foundation, a qualified organization)

They will deduct state income taxes paid during the year, rather than sales taxes paid during the year.

In 2018, Nick started provided medical consulting services as a sole proprietor and had the following

income and expenses from his consulting business:

- Consulting fees received - $55,000

- Liability insurance premiums paid - $1,000

- Office supplies - $400

- Meals with clients (all reasonable in amount) - $1,500

He will use the cash method of accounting for tax purposes.

Nick drove his personal automobile to/from meeting clients, for a total of 2,200 miles in 2018. He used the

same vehicle for personal purposes, but did not drive his wife's car at all. Nick verified that he has kept

thorough written records to support the deduction for his business transportation. (Note that you will have to look up the mileage rate for 2018.)

Nick made an investment in an ultrasound machine, which he will use in his consulting business. He

placed this in service on October 29, 2018, and paid $25,000. The equipment has a 5-year class life. He

does not want to expense any of the cost under Section 179 or take bonus depreciation on the machine, but will use MACRS to calculate his depreciation deduction in 2018.

Nick took a business trip to a client's office during the year. He had no personal days on this trip. The

expenses of the trip were:

- Airfare - $425

- Lodging - $1,200

- Parking at the airport - $65

- Taxi from the airport to the hotel - $30

- Meals while traveling - $410

Based on the advice of a friend, Nick made quarterly estimated tax payments (Federal tax) in anticipation of the tax he would owe on his consulting income in 2018, totaling $20,000.

The couple had the following transactions involving their investment assets during 2018:

- Sold 500 shares of Urban Enterprises on 2/14/2018 for $185,000. (Stock was inherited from Nick's

father, who died on November 28, 2017. The FMV of the stock on that date was $172,000; Nick's

father had purchased the stock for $100,000.)

- Sold 100 shares of Harbaugh Inc. stock on 5/1/2018 for $25,000. (Stock was purchased on 1/2/2017 for $32,500.)

- Sold 300 shares of Buckeye Corp. stock on 11/1/2018 for $100,000. (Stock was purchased on

11/1/2017 for $112,000).

All of these transactions were reported to them on form 1099-B from their investment company, and the basis was reported to the IRS for all of these transactions.

Assignment Instructions: Individually or with a partner, prepare the following for 2018: Form 1040; Form 4562 (page 1 only); Schedules 1, 4, and 5; and Schedules A, B, C , D, and SE for Nick Viall and Rachel Lindsay.