22 Jul DETERMINE THE FEDERAL INCOME TAX FOR 2014 FOR THE DEANS ON A JOINT RETURN BY COMPLETING THE APPROPRIATE FORMS.
Tax Return Problem Cases ACCT 440Spring 2016
Instructions: Use the relevant tax forms for your computations. You must download the relevant forms from the IRS website. Do not use tax software to prepare the returns. You need not complete the state tax returns. Make sure to include all the relevant supporting schedules for your federal return.
There are a total of five returns assignments. All five returns must be turned in no later than Monday May 2 at 5:00 p.m. Please turn in the returns in one envelope to room JH 1111.
This is an individual assignment. You are not allowed to discuss or share the answers with any other student friend tax professional colleague or a professor.
Tax Return 1:
Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive Santa Fe NM 87501. Lance works for the convention bureau of the local chamber of commerce while Wanda is employed part-time as a paralegal for a law firm.
a. During 2014 the deans had the following receipts:
Salaries ($60000 for Lance $41000 for Wanda)
Interestincome $101000
City of Albuquerque general purpose bonds
$1000
Ford Motor Company bonds
1100
Ally Bank certificate of deposit
400 2500
Child support payment from John Allen
7200
Annual gift from parents
26000
Settlement from Roadrunner Touring Company
90000
Lottery winnings
600
Federal income tax refund (for tax year 2013)
400
Wanda was previously married to John Allen. When they divorced several years ago Wanda was awarded custody of their two children Penny and Kyle. (Note: Wanda was never issued a form 8332 wavier.) under the divorce decree John was obligated to pay alimony and child supportthe alimony payments were to terminate if Wanda remarried.
In July while going to lunch in downtown Santa Fe Wanda was injured by a tour bus. As the driver was clearly at fault the owner of the bus Roadrunner Touring Company paid for her medical expenses (including one-week stay in a hospital). To avoid a lawsuit Roadrunner also transferred
$90000 to her in settlement of the personal injuries she sustained.
The Deans has the following expenditures for 2014:
Medical expenses (not coveredbyinsurance) $7200 Taxes-
Property taxes on personal residence
$3600
State of new Mexico income tax (includes amount
withheld from wages during 2014)
4200
7800
Interest on home mortgage
6000
Paid church pledge
3600
Life insurance premiums (policy on Lances life)
1200
Contributions to traditional IRA (on Wandas behalf)
5000
Traffic fines
300
Contributions to the reelection campaign fund of the
major of Santa Fe
500
Funeral expense for Wayne Boyle
6300
The life insurance policy was taken out but several years ago and designates Wanda as the beneficiary. As a part time employee Wanda is excluded from coverage under her employers pension plan.
Consequently she provides for her own retirement with a traditional IRA obtained at a local trust company. Because the mayor is a member of the local Chamber of Commerce Lance felt compelled to make the political contribution.
The Deans household includes the following for whom they provide more than half of the support:
Social Security Number
Birth Date
Lance Dean (age 42)
123-45-6786
12/16/1972
Wanda Dean (age 40)
123-45-6787
08/08/1974
Penny Allen (age 19)
123-45-6788
10/09/1995
Kyle Allen (age 17)
123-45-6789
05/03/1997
Wayne Boyle (age75)
123-45-6785
06/15/1939
Penny graduated from high school on May 9 2014 and is undecided about college. During 2014 she earned $8500 (placed in a savings account) playing a harp in the lobby if a local hotel. Wayne is Wandas widower father who died on January 20 2014. For the past few years Wayne qualified as a dependent of the Deans.
Federal income tax withheld is $5200 (Lance) and $3000 (Wanda). The proper amount of social security and Medicare tax was withheld.
Determine the Federal income tax for 2014 for the Deans on a joint return by completing the appropriate forms. They do not want to contribute to the Presidential Election Campaign Fund. All members of the family had health care coverage for all of 2014. If an overpayment results it is to be refunded to them.
Tax Return 2:
Logan B Taylor is a widow whose wife Sara died on June 6 2012. He lives at 4680 Dogwood Lane Springfield MO 65801. He is employed as a paralegal by a local law firm. During 2014 he had the following receipts:
Salary
$80000
Interest income-
City of Springfield general purpose bond
$3000
Money market account at Omni Bank
300
Savings account at Boone State Bank
1100
4400
Inheritance from Daniel
60000
Life insurances proceeds
200000
Amount from sale of St. Louis lot
80000
Proceeds from estate sale
9000
Federal income tax refund (for 2013 tax overpayment)
700
Logan inherited securities worth $60000 from his uncle Daniel who died in 2014. Logan also was the designated beneficiary of an insurance policy on Daniels life with a maturity value of $200000. The lot in St. Louis was purchased on May 2 2009 for $85000 and held as an investment. As the neighborhood has deteriorated Logan decided to cut his losses and sold the lot on January 5 2014 for $80000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g. camper boat furniture and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the
$9000 he received and has declined or stayed the same in value since Sara and Daniel died.
Logans expenditures for 2014 include the following:
Medicare expenses (including $10500fordental) $11500 Taxes
State if Missouri income tax (includes withholdingsduring2014) $3200
Property taxes onpersonalresidence 4500 7700
Interest onhomemortgage 4600
Contributions to church (paid pledges for 2014and2015) 4800
Logan and his dependents are covered by his employers health insurance policy for all of 2014. However he is subject to a deductible and dental care is not included. The $10500 dental charge was for Helens implants. Helen is Logans widowed mother who lives with him (see below). Logan normally pledges $2400 ($200 per month) each year to his church. On December 4 2014 upon the advice of his pastor he prepaid his pledge for 2015.
Logans household all of whom he supports includes the following:
Social Security Number
Birth Date
Logan Taylor (age 48)
123-45-6787
08/30/1966
Helen Taylor (age 70)
123-45-6780
01/13/1944
Asher Taylor (age 23)
123-45-6783
07/18/1991
Mia Taylor (age 22)
123-45-6784
02/16/1992
Helen receives a modest Social Security benefit. Asher a son is a full-time student in dental school and earns $4500 as a part time dental assistant. Mia a daughter does not work and is engaged to be married.
Using the appropriate forms and schedules compute Logans federal income tax for 2014. Federal income tax of $5500 was withheld from his wages. If Logan has any overpayment on his income tax he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were withheld. Logan does not want to contribute to the Presidential Election Campaign Fund.
Tax Return 3:
Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1111 respectively. Alices birthday is September 21 1967 and Bruces is June 27 1966. They live at 473 Revenue Avenue Lowell MA 01850. Alice is the office manager for Lowell Dental Clinic 433 Broad Street Lowell MA 01850 (employer identification number 98-765432). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Plymouth Corporation 1247 Central Avenue Hauppauge NY 11788 (employer identification number 11-1111111)
The following information is shown on their Wage and Tax Statement (Forms W-2) for 2014.
Lines
Description
Alice
Bruce
1
Wages tips other compensation
$58000
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