COMPREHENSIVE PROBLEM 4
With Emphasis on Schedule C
Shelly Beaman (social security number 412-34-5670) is single and resides at 540 Front Street, Ashland, NC 27898.
|Shelly’s W-2 wages||$55,800|
|Social security wages||55,800|
|Social security withholding||3,460|
|1099-INT New Bank||532|
|1099-DIV XYZ, Inc.|
Shelly had the following itemized deductions:
|State income tax withholding (from W-2)||$ 3,348|
|State income tax paid with 2014 return||600|
|Real estate tax||4,200|
Shelly also started her own home design consulting business in March 2015. The results of her business operations for 2015 follow:
|Gross receipts from clients||$154,000|
|Vehicle mileage||21,000 business miles (2,100 per month)|
|32,000 total miles during the year|
|2009 Chevy Suburban|
|Placed in service 03/01/15|
|State license fees||(155)|
|Professional education programs (registration)||(550)|
|Travel to education program|
|Lodging $119/night × 3 nights|
|Meals per diem $46 × 3 days|
|Business Assets||Date Purchased||Cost|
Shelly made a $27,000 estimated tax payment on September 15, 2015.
Prepare Shelly’s Form 1040 for 2015 including all the supplementary schedules. Schedule A, Schedule B, Schedule C, Form 4562, and Schedule SE are required. Section 179 is elected on all eligible assets in 2015. She wants to contribute to the presidential election campaign and does not want anyone to be a third-party designee. Shelly had qualifying health care coverage at all times during the tax year. We have provided filled-in source documents that are available in Connect. For any missing information, make reasonable assumptions.
COMPREHENSIVE PROBLEM 6
With Emphasis on Schedule D
Debra Simon is a single taxpayer. She is employed as a corporate attorney and lives at 1400 Sand Dollar Circle, Sandville, FL 33868. Her social security number is 412-34-5670.
For tax year 2015, Debra had the following income information:
|Social security withholding||7,347|
|Federal income tax withheld||34,550|
|State income tax withheld||–0–|
|New Bank 1099-INT||5,500|
|Hope Bank 1099-INT||3,875|
Debra had the following stock transactions during 2015. A 1099-B was received for the proceeds of each sale:
|300 sh. IBM||01/05/08||5/11/15||$ 16,500||$14,100||$ 875|
|200 sh. SMI||01/05/08||5/15/15||41,000||41,800||2,050|
|100 sh. BMI||03/05/14||4/12/15||10,500||11,400||525|
|300 sh. ABC||07/05/15||9/15/15||16,500||14,100||825|
|300 sh. DDC||05/12/15||10/11/15||45,000||51,000||2,250|
|300 sh. PPC||01/05/08||5/11/15||5,000||2,800||250|
|4,000 sh. LLP||Inherited||12/11/15||436,000||*||21,800|
|1,500 sh. QQM||Inherited||5/11/15||41,325||*||2,066|
Debra also sold her wine collection for $38,000. She had purchased the wine more than five years ago on various dates for a total of $19,000.
Debra has a capital loss carryover from 2014 of $11,700: $3,000 short-term and $8,700 long-term.
Debra rents a condo (no mortgage interest) and lives in Florida (no state income tax). Thus she claims the standard deduction.
Complete the 2015 tax return for Debra Simon. You do not need to complete the loss carryover worksheet but do need to enter the carryover amount in the appropriate place on Schedule D. She wants to contribute to the presidential election campaign and does not want anyone to be a third-party designee. Debra had qualifying health care coverage at all times during the tax year. For any missing information, make reasonable assumptions.
COMPREHENSIVE PROBLEM 7
With Emphasis on Schedule E
Chris and Stefani Watanabe live with their two boys at 1400 Victoria Lane, Riverside, CA 92501. Chris is an accountant who has his own accounting practice. Stefani is an elementary school teacher. Their sons, Justin and Jordan, are ages 12 and 9, respectively. The following is additional information regarding the Watanabes.
Social security numbers for the Watanabe family:
They paid $4,500 to Friendly Hills Child Care center for after-school care for both Justin and Jordan, allocated equally.
Stefani’s W-2 from the Riverside school district showed the following:
Chris’s accounting business is located in downtown Riverside. His business had the following income and expense information for the year:
|Meals and entertainment||2,400|
Additionally, Chris and Stefani paid the following expenses during the year:
|Medical and dental expenses||$ 4,500|
|Property tax (home on Victoria Lane)||3,750|
|State income taxes||3,900|
|Donations to the church (cash)||3,500|
|Mortgage interest (home on Victoria Lane)||14,900|
Chris and Stefani also earned $975 of interest income from California Bank during the year.
Lastly, Chris and Stefani own a three-bedroom cabin in Big Bear Lake (they bought it in 2004). The address is 3105 Stonehedge Road, Big Bear Lake, CA 92315. They did not use the property for personal use at any time during the year. The revenue and expenses for the Big Bear Lake rental property are as follows:
|Auto (standard mileage)||267|
|Repairs and maintenance||1,100|
The Watanabes also made $20,000 and $9,000 in federal and California estimated income tax payments, respectively, during the year.
Prepare the Watanabes’ federal tax return for 2015. Use Form 1040, Schedule A, Schedule C, Schedule E, Schedule SE, and any additional schedules or forms they may need. The Watanabes had qualifying health care coverage at all times during the tax year. They want to contribute to the presidential election campaign, and they do not want anyone to be a third-party designee. For any missing information, make reasonable assumptions.