Shelly Beaman (social security number 412-34-5670) is single and resides at 540 Front Street, Ashland, NC 27898.

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
 Federal withholding 10,044
 Social security wages 55,800
 Social security withholding 3,460
 Medicare withholding 809
 State withholding 3,348
1099-INT New Bank 532
1099-DIV XYZ, Inc.
 Ordinary dividends 258
 Qualified dividends 258

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
Mortgage interest 11,800
Charitable contributions 2,500

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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
Postage (750)
Office supplies (1,500)
State license fees (155)
Supplies (5,300)
Professional fees (2,500)
Design software (1,000)
Professional education programs (registration) (550)
Travel to education program
 Airplane (350)
 Lodging $119/night × 3 nights
 Meals per diem $46 × 3 days
Business Assets Date Purchased Cost
Laptop 6/08/15 $  2,500
Computer 3/05/15 5,700
Printer 3/01/15 1,800
Copier 6/02/15 1,700
Furniture 4/01/15 5,000
Building 3/01/15 175,000
Phone (600)
Internet service (450)
Rent (8,300)
Insurance (1,700)

Shelly made a $27,000 estimated tax payment on September 15, 2015.

Required:

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:

Wages $155,000
Social security withholding 7,347
Medicare withholding 2,248
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:

Transaction Purchased Sold Proceeds Cost Sale Expenses
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.

Required:

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.

Page B-8

Social security numbers for the Watanabe family:

Chris 412-34-5670
Stefani 412-34-5671
Justin 412-34-5672
Jordan 412-34-5673

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:

Gross revenues $165,000
Expenses:
 Advertising $  2,100
 Insurance 1,200
 Legal fees 10,500
 Office supplies 800
 Rent 24,000
 Travel 6,945
 Meals and entertainment 2,400
 Utilities 2,800
 Wages 34,000
 Dues 650

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:

 

Rental income $18,000
Expenses:
 Insurance $ 1,200
 Property taxes 2,500
 Auto (standard mileage) 267
 Management fees 1,600
 Repairs and maintenance 1,100
 Mortgage interest 9,000
 Depreciation 960
 Utilities 450

Page B-9

The Watanabes also made $20,000 and $9,000 in federal and California estimated income tax payments, respectively, during the year.

Required:

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.

 

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