Tax Project

The following Course Outcome is assessed in this assignment:

AC256-4: Prepare an Individual Tax Return Year 2020.

Complete Problem I:7-64 in your text as your tax project and submit your completed file in Word, Excel, or PDF format to the Dropbox.

Dan M. and Cheryl A. Peters are married, file a joint return, and have no children. Dan, age 45, is an independent contractor working in pharmaceutical sales and Cheryl, age 42, is a nurse at a local hospital. Dan's SSN is 400-20-0000 and Cheryl's SSN is 200-40-0000 and they reside at 2033 Palmetto Drive, Atlanta, GA 30304. Dan is paid according to commissions from sales, and he has no income tax or payroll tax withholdings. Dan operates his business from his home office. During 2020, Dan earned total commissions in his business of $125,000. Cheryl earned a salary during 2020 of $45,400, with the following withholdings: $6,000 federal taxes, $1,800 state taxes, $2,815 OASDI (Social Security), and $658 Medicare taxes. During 2020, Dan and Cheryl had interest income from corporate bonds and bank ac- counts of $1,450 and qualified dividends from stocks of $5,950. Dan also actively trades stocks and had the following results for 2020: Date Acquired Date Sold Proceeds Cost Stocks 7/1/2015 12/1/2020 $10,900 Gain or LoSS $6,000 $4,900 Long-term $9,200 ($3,200) Long-term $11,800 ($7,800) Short-term Stocks 7/1/2018 12/1/2020 $6,000 Stocks 7/1/2020 10/30/2020 $4,000 He had no capital loss carryovers from previous years. Basis for the stocks were re- ported to the IRS by the brokerage firm. Dan does a considerable amount of travel in connection with his business and uses his own car. During 2020, Dan drove his car a total of 38,000 miles, of which 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the follow- ing travel expenses while away from home during the year: Hotel $4,200 820 Meals ntertainment of customers 1.080 100 Tips Laundry and cleaning Total $6,350 Dan uses the simplified method to deduct expenses for his office-in-home. His office measures 15 feet by 12 feet in size. Cheryl incurred several expenses in connection with her nursing job. She paid $4.50 in professional dues, $200 in professional journals, and $3.50 for uniforms. Dan and Cheryl had the following other expenditures during the year: Stocks 7/1/2020 10/30/2020 $4,000 $11,800 ($7,800) Short-term He had no capital loss carryovers from previous years. Basis for the stocks were re- ported to the IRS by the brokerage firm. Dan does a considerable amount of travel in connection with his business and uses his own car. During 2020, Dan drove his car a total of 38,000 miles, of which 32,000 were business related. He also had business-related parking fees and tolls during the year of $280. Dan uses the mileage method for deducting auto expenses. Dan also had the follow- travel expenses while away from home during the year: $4,200 820 Meals Entertainment of customers 1,080 Tips Laundry and cleaning Total $6.350 Dan uses the simplified method to deduct expenses for his office-in-home. His office measures 15 feet by 12 feet in size. Cheryl incurred several expenses in connection with her nursing job. She paid $450 in professional dues, $200 in professional journals, and $3.50 for uniforms. Dan and Cheryl had the following other expenditures during the year: Health insurance premiums (after-tax) $ 4,400 Doctor bills 470 Real estate taxes on home 6.800 Personal property taxes 1,400 Mortgage interest-all deductible 7.400 Charitable contributions-cash 9,000 Charitable contributions-Apple stock owned for 5 years: FMV $8.000 Adjusted basis 2,000 Tax preparation fees $250 allocated to Dan's business) Paid by Dan in connection with his business