Tax Return Problem

Due at beginning of class -

December 4, 2019

(Forms available at:http://www.irs.gov/formspubs/)

Directions:Prepare 2019 federal income tax return, including all necessary schedules and attachments, for Donald and Melania Trump using the following information:

Social Security Numbers:Donald- 123-45-6789, Melania - 333-222-111

Donald is age 64, Melania is age 51.

Son -Barron - age 11 - SS# 555-77-6666.Melania paid $5,000 in child care expenses for Barron while she worked.

Salary:Donald - $50,000, Melania - $20,000

Barron- $600

Interest from Mellon Bank - $8,000, Interest on New York municipal bonds - $4,000

Dividends on Trump, Inc. stock - 2,000

Sold 1,000 shares ofIBM stock for $6,000 on January 15, 2019.Shares were purchased on January 15, 2008 for $4,000.

Melania had the following operating results from her modeling business, which she operated as a sole proprietorship:

Sales income - $12,000

Office supplies - 4,000

Advertising Expenses - 2,000

Entertainment expense - 1,000

Donald and Melania rented out the old family home in New York for the entire year:

Rental income - $7,000, Mortgage interest - $3,000

Depreciation - The house was purchased in 12/01/17 at a cost of $100,000 and is depreciated on a straight-line basis over 27.5 years.Accumulated Depreciation from prior years was $3,788.

Mortgage interest on the white house owned by Donald and lived in by family - $8,000

Real Estate taxes on the white house - $6,000;

State income taxes withheld from Donald's wages - $5,000

Federal income taxes withheld from Donald's wages - $4,000

New York City sales tax paid by Donald was $1,800.

State income tax refund of 2018 overpayment received in 2019 - $2,000 (2018 state income taxes were fully deductible on the 2018 tax return.)

Donald had $6,000 of business travel expenses, which were reimbursed by his employer.

Melania paid $3,000 in college tuition for graduate school.

Donald contributed $9,000 to the United Way, and $6,000 to Fordham University during the year.

Melania paid $4,000 of student loan interest.

Notes

1.Please make up any non-financial information needed to complete the tax return that is not provided above.

Extra Credit-To potentially assist in improving one's grade to a "B-", "C" or "D", complete aseparatetax return forDonald and Melania, adding the additional information found below:

Sold 1,000 shares of GM stock for $5,000 on January 15, 2019.Shares were received as a gift from Ivanka, on January 15, 2016.Ivanka purchased stock on January 1, 1999 for $9,000.The value of the stock on January 15, 2016 was $6,000.

Donald received $23,000 in social security benefits during the year.

Donald paid $12,000 in alimony and $10,000 in child support to his first wife, Stormy.The couple was divorced in 2015.

Melania's law business purchased the following assets in 2019:

7 year equipment - $4,000 on Nov 30

5 year equipment - $2,000 on Dec. 15

(Please maximize her 2019 depreciation deduction.)

Unreimbursed medical expenses

-Dr. appointments for Donald and Melania - $8,000

-Dr. appointments for Barron - $7,000

-Prescription drugs - $4,000

-Melania's eye glasses- $500

-Medical insurance premiums - $2,500

Donald and Melania also have a twenty year old daughter, Hilary.Hilary is a full-time graduate student and Donald paid $8,000 of tuition and 2,500 for food, on her behalf.Hilary had no other expenses during the year.

Donald bought business suits for $5,000 that he wears only to the office and for official work events.

Donald pays $2,500 in union dues related to his employment.

Donald and Melania like to eat out and spent $5,000 at various restaurants in the D.C. area.