Tax Project

The following Course Outcome is assessed in this assignment:

AC$256-4$: Prepare an Individual Tax Return.

Complete Problem I:$8-64$ in your text as your tax project and submit your completed file in Word, Excel, or PDF format to the Dropbox.

You may complete the tax return in a number of ways. You may download the required forms from the IRS website.

The PDF files will allow you to enter the required information directly on the screen, and you may save those PDF files. Next, you may print out the forms and fill them in manually. Then, you may scan the documents as PDF files for upload to the Dropbox. Or$,$ another option might be to use any tax return preparation software. Be sure it is the correct filing year, and only submit the filing copy of the return in PDF format.

Kelly and Chanelle Chambers, ages $47$ and $45,$ are married and live at $584$ Thoreau Drive, Boston, MA $59483.$ Kelly$$s Social Security number is $111-11-1111$ and Chanelle$$s is $222-22-2222.$ The Chambers have two children: Emma, age $23,$ and Chet, age $19.$ Their Social Security numbers are $333-33-3333$ and $444-44-4444,$ respectively. Emma is a single college student and earned $$8,000$ during the summer. Kelly and Chanelle help Emma through school by paying for her room, board, and tuition. Emma lives at home during the summer. Chet has a physical handicap and lives at home. He attends a local university and earned $$4,000$ working for a marketing firm. In sum, Kelly and Chanelle provide more than $50\%$ of both Emma$$s and Chet$$s total support for the year. Kelly is a commercial pilot for a small airline. His salary is $$95,000,$ from which $$19,000$ of federal income tax and $$8,000$ of state income tax were withheld. Kelly also pays premiums for health, disability, and life insurance. $$2,000$ of the premium was for health insurance, $$250$ for disability, and $$400$ for life insurance. Chanelle owns Alliance Networks, a proprietorship that does network consulting. During the year, Chanelle$$s gross revenues were $$23,000.$ She incurred the following ex$-$penses in her business:

Liability insurance $ $700$

Software rental $5,400$

Journals and magazines $150$

Training seminars $1,200$

Supplies $1,300$

Donations to a political campaign fund $800$

Kelly enjoys playing guitar and plays in a band. Kelly's band has developed a local following. This year, his gross revenues were $$1,200$ for playing shows and $$700$ on CD sales. He incurred the following expenses:

Studio rent expense $ $1,300$

Sound system repairs $200$

CD production $500$

New guitar and amplifier $800$

Kelly's father passed away during the year. Kelly and Chanelle received $$100,000$ from the life insurance policy. Neither Kelly nor Chanelle paid any of the premiums.

Chanelle purchased $100$ shares of Thurston co$.-$stock on May $1,1991,$ for $$1,000.$ Thurston Co$.$ was declared bankrupt during the current year.

Chet's physician recommended that he see a physical therapist to help with his disability. Kelly paid the therapist $$7,000$ during the year because his insurance would not cover the bills.

Kelly and Chanelle went to Las Vegas and won $$5,000$ at the blackjack table. The next night, they lost $$6,000.$

Kelly and Chanelle gave $$900$ to their church and, during the year, they had the following other income and expenses:

Real estate taxes $$1,400$

Property taxes on car $($determined by value$)500$

Home mortgage interest $9,000$

Credit card finance charges $2,600$

Tax return preparation fees $($$$600$ is allocable to Chanelle's business$)1,000$

Sales tax on purchases during the year $6,200$

Interest from a savings account $800$

Interest from City of Boston Bonds $700$

Dividend from $3$M stock $400$

Prepare Kelly and Chanelle's tax return Form $1040$ and Schedules A$,$ B$,$ C$,$ D$,$ and SE for the current year. Assume the couple had no transactions involving virtual currency.