Tax Return Project - Form 1040 Help - The forms are modified from the 2017 versions. I have posted them at the end just in case.

Check Figures:

Form 1040, Line 1: 102,201 Form 1040, Line 7: 199,850

Form 1040, Line 9: 22,000 Form 1040, Line 16: 33,124

Schedule 1, Line 27: 7,418 Schedule 4, Line 57: 14,836

Ron W. Swanson (Age 55) and his wife Tammy S. Swanson (Age 46) live in Indianapolis, Indiana with two

children: April (Daughter, Age 16) and Andy (Son, Age 9). Both children qualify as dependents of Ron and

Tammy (qualifying children) for federal income tax purposes. Neither Ron nor Tammy can be claimed as

a dependent on anothers return, and neither would like to contribute to the Presidential Election

Campaign Fund. Ron and Tammy have no carryovers from the prior year. The Swansons did not have a

financial interest in or signature authority over a foreign financial account at any time in 2018. They also

did not receive any distributions (or were grantors of or transferors to) a foreign trust in 2018.

Rons older brother, Jimmy (Age 60), lost his job in 2018 and came to live with the Swansons in January.

Rons sister pays for the majority of the support for Jimmy, and Jimmy earned $5,500 from a part-time

job in 2018.

The entire Swanson family was covered by minimum essential health insurance during each month in

2018.

The Swansons provided the following information:

Social Security Numbers:

o Ron: 999-29-9999

o Tammy: 999-44-4444

o April: 996-22-2073

o Andy: 996-23-3073

o Jimmy: 987-44-2210

Address:

o 6515 Carrollton Avenue, Indianapolis, Indiana 46220

1. In 2018, Ron was a director of recreation working for Broad Ripple Parks. His wages were

$102,201, with $33,124 in federal taxes withheld and $3,233 in state taxes withheld. Since

Tammy works as a self-employed architect, Ron adjusted his federal withholding to be

abnormally high.

2. Tammy is a self-employed architect in the Indianapolis area and runs this enterprise as Fountain

Square Architects LLC (FSA LLC). FSA LLC is conducted as a sole proprietorship with Tammy

being the sole owner. FSA LLC started business on January 1, 2016 and is located at 653 Virginia

Avenue, Indianapolis, Indiana 46203. The EIN for the business is 57-3939394, and the NAICS

code is 541310. The financial information provided by Tammy on this business (cash method) is

enclosed at the end of the problem.

3. Ron and Tammy own a rental house located at 27 Summer St, Lubec, Maine 04652. The house (a

single-family residence) was rented for 365 days in 2018, and all assets related to the house are

fully depreciated as they have owned the property for 30 years and have not made substantial

improvements to the property in 17 years. The financial information provided by Ron on this

rental property (cash method) is enclosed at the end of the problem (Peacock House Rental

Property). Assume the income from this property is Qualified Business Income.

4. Tammy received disability benefits totaling $10,000 in 2018 from a plan that she purchased with

after-tax dollars.

5. The Swansons jointly received the following interest and dividend payments in 2018:

a. Ordinary Dividends from Knope Corporation: $233

b. Ordinary Dividends from Pawnee Corporation: $899

c. Qualified Dividends from Eagleton Corporation: $1,000

d. Interest from Navy Federal Credit Union: $975 ($1,100 interest with $125 early

withdrawal penalty

e. Interest from the City of West Lafayette bonds: $1,050

f. Interest from Bank of America: $60

6. Ron has a self-managed equities account and made two trades during 2018. Neither of these

stocks qualify as 1244 Small Business stock. Note: You do not need to complete the Qualified

Dividends and Capital Gain Tax Worksheet, but it may help you some in calculating tax liability.

a. He purchased 1,000 shares of Pawnee Corporation stock on January 7, 2018 for $30.75

per share ($30,750 total cost, no commissions). He sold all 1,000 shares on December

12, 2018 for $30.58 per share net of commissions ($30,580 total proceeds less

commissions). The cost basis for this sale was reported to the IRS.

b. Rons last trade was the purchase of 10 shares of Krannert Corporation stock on March

19, 2018 for $510.00 per share ($5,100 total cost, no commissions). He sold this stock on

December 20, 2018 for $110.00 per share ($1,100 total proceeds less commissions). The

basis of this stock was reported to the IRS.

7. Ron and Tammy paid personal property taxes of $128 on Rons 2002 Buick Park Avenue Ultra

and $1,097 on Tammys 2018 Audi SQ5. Both are their personal vehicles (no business use).

8. In 2018, Ron and Tammy incurred the following unreimbursed medical expenses (all paid out of

pocket):

a. Doctors office visits for April and Andy: $7,323

b. Elective cosmetic surgery rhinoplasty (nose job) for Ron: $7,551

c. LASIK eye surgery for Tammy: $7,880

d. Prescription eyeglasses and contacts for Ron and Tammy: $360

e. Prescription drugs for Ron, Tammy, and April: $1,222

9. Andy attended daycare in 2018 at The Broad Ripple Conservatory for Gifted Children (EIN #53-

7556555) at 820 E 67th Street, Indianapolis, Indiana 46220. The total fees paid for Andy amount

to $2,400 for 2018. Neither Ron nor Tammy received dependent care benefits from an employer

in 2018.

10. Tammy made one estimated payment of state income tax of $1,000 on June 15, 2018. Ron and

Tammy have paid over 90% of their current year tax liability, so there is no underpayment

penalty.

11. Ron and Tammy own their house, which is their principal residence, but have a mortgage on the

property ($295,724 loan balance). In 2018, they paid $4,541 in real estate taxes on the property

and $9,425 in interest (reported on a Form 1098). The fair market value of the house is

$680,000.

12. Ron contributed $1,100 (after-tax dollars) to a Health Savings Account (with family coverage) for

2018. The Swansons made no disbursements from this account in 2018. This contribution

qualifies as an above-the-line deduction since it was not made through an employer.

13. Additionally, Ron and Tammy made the following charitable contributions in 2018:

a. $9,000 cash donation to The Salvation Army (a qualified charity)

b. $6,000 cash donation to a family in need

c. $300 cash donation to the Leslie Knope for Senate political campaign

14. The Swansons replaced some appliances in their house in 2018. Tammy donated her old

appliances valued at $250 to Habitat for Humanity (a qualified charity) in 2018. She originally

paid $4,200 for these appliances. A receipt was provided, and no goods or services were

rendered by the non-profit in exchange for this donation. Nothing from this replacement

qualifies for a Residential Energy Tax Credit.

15. Ron contributed $4,000 to a traditional IRA in 2018 (not through an employer). You can assume

this is fully deductible as an above the line deduction.

16. Be sure to calculate the tax by using the schedules attached at the back of the project (round

the tax to the nearest dollar).

FOUNTAIN SQUARE ARCHITECTS LLC INFORMATION

Tammy reported the following information for Fountain Square Architects business activities (FSA LLC

uses the cash method of accounting):

Revenues:

Real Estate Commissions $502,775

Total revenue $502,775

Expenses:

Advertising $ 1,590

Wages 148,848

Employee Benefits 28,000

Insurance-professional 32,000

Office building rent 48,500

Vehicle lease 34,320

Utilities 21,750

Depreciation 4,847

Meals 700

Supplies 24,000

Taxes and licenses 39,220

Legal and professional fees 13,350

Repairs and maintenance 1,000

Total Expenses $398,125

FSA LLC purchased and placed in service the following fixed assets (assume no fixed assets were in

service prior to 2018):

Item Amount	Depreciable Life	Date Purchased	Amount
MacBook Pro Computer	5yr	December 1st	2,200
iPad	5 yr	January 2nd	600
Office Furniture	7 yr	January 7th	30,000

FSA LLC does not want to claim any bonus depreciation or Section 179 expensing on any of these assets.

While you typically would need to do so in practice, you do not have to attach the election out of bonus

depreciation to this return. The depreciation included in the profit & loss statement above represents

the correct amount for tax depreciation.

FSA LLC filed Forms 1099 for payments made to contractors when required to do so.

PEACOCK HOUSE RENTAL PROPERTY INFORMATION

Ron reported the following information for the Peacock House rental property:

Revenues:

Rental Income $18,400

Total revenue $18,400

Expenses:

Insurance $4,400

Commissions $1,080

Repairs $1,120

Cleaning & Maintenance $2,000

Taxes $4,800

Total Expenses $13,400

Ron and Tammy were not required to file any Forms 1099 for this property as separate payments to

repair contractors did not exceed $600.

2018 Tax Tate Schedules Individuals Schedule X-Single Schedule Z-Head of Household If taxable income But not over: The tax is: If taxable income is But not over: The tax is: is over: over: $ 9.525 | 10% of taxable income $ 13.600 | 10% of taxable income S 9.525 $ 3S.700 | $952.50 plus 12% of the S 13.600 $ 5I.S00 | $1.360 plus 12% of excess over $9.525 the excess over $13.600 S 38,700 $ S2.500 | $4,453.50 plus 22% of the S 51,800 $ 82,500 | $5.944 plus 22% of excess over $38.700 the excess over S51.800 S 82,500 $157.500 | $14.089.50 plus 24% of the S S2,500 $157,500 | $12.698 plus 24% of excess over $82,500 the excess over S82.500 $157.500 $200.000 | $32.089.50 plus 32% of the $157,500 $200,000 | $30.698 plus 32% of excess over $157,500 the excess over $157,500 $200,000 $500.000 | $45.689.50 plus 35% of the $200,000 $500.000 | $44,298 plus 35% of excess over $200.000 the excess over $200,000 $150.6S9.50 plus 37% of the excess over $500,000 $149.298 plus 37% of the excess over $500.000 $500,000 $500,000 2018 Tax Credit for Qualifying Child under age 17: S2,000 2018 Tax Credit for Other Qualifying Dependents: S500 2018 Tax Tate Schedules Individuals Schedule X-Single Schedule Z-Head of Household If taxable income But not over: The tax is: If taxable income is But not over: The tax is: is over: over: $ 9.525 | 10% of taxable income $ 13.600 | 10% of taxable income S 9.525 $ 3S.700 | $952.50 plus 12% of the S 13.600 $ 5I.S00 | $1.360 plus 12% of excess over $9.525 the excess over $13.600 S 38,700 $ S2.500 | $4,453.50 plus 22% of the S 51,800 $ 82,500 | $5.944 plus 22% of excess over $38.700 the excess over S51.800 S 82,500 $157.500 | $14.089.50 plus 24% of the S S2,500 $157,500 | $12.698 plus 24% of excess over $82,500 the excess over S82.500 $157.500 $200.000 | $32.089.50 plus 32% of the $157,500 $200,000 | $30.698 plus 32% of excess over $157,500 the excess over $157,500 $200,000 $500.000 | $45.689.50 plus 35% of the $200,000 $500.000 | $44,298 plus 35% of excess over $200.000 the excess over $200,000 $150.6S9.50 plus 37% of the excess over $500,000 $149.298 plus 37% of the excess over $500.000 $500,000 $500,000 2018 Tax Credit for Qualifying Child under age 17: S2,000 2018 Tax Credit for Other Qualifying Dependents: S500