ACCTMIS 3400 TAX FORM PROJECT Client Facts: Peter M. Weber and Hannah A. Sluss, husband and wife, file a joint return. They live at 113 Bachelor Way, Westlake Village, CA, 91361. Peter’s Social Security number is 234-56-7809, and Hannah’s is 987-56-4321. Peter was born on November 12, 1954, and Hannah was born on September 25, 1982. Peter and Hannah file a joint tax return. Peter retired from Delta Airlines, and Hannah works part-time as a nurse. Peter and Hannah had the following gross income for 2019: • Hannah earned a salary of $52,000 working part-time as a nurse • Interest income of $31,000 from bonds issued by the city of Los Angeles • Interest income of $26,500 from various corporate bond investments. Other information that affects their tax return for the year is as follows: • Hannah had $6,800 Federal tax withheld from her paycheck during the year and $3,600 in state income taxes withheld. • The couple had other expenses that were all paid in 2019, which they told you may qualify as itemized deductions: Ø Property taxes on their home – $7,500 Ø Mortgage interest - $15,000 (acquisition indebtedness; balance of $450,000 at the end of the year) Ø Charitable contribution (cash) -$3,000 (to Trump Foundation, a qualified organization) They will deduct state income taxes paid during the year, rather than sales taxes paid during the year. • In 2019, Peter started provided aviation consulting services as a sole proprietor and had the following income and expenses from his consulting business: Ø Consulting fees received - $109,200 Ø Liability insurance premiums paid - $3,900 Ø Office supplies - $700 Ø Meals with clients (all reasonable in amount) - $2,400 He will use the cash method of accounting for tax purposes. • Peter drove his personal automobile to/from meeting clients, for a total of 4,400 miles in 2019. He used the same vehicle for personal purposes but did not drive his wife’s car at all. Peter verified that he has kept thorough written records to support the deduction for his business transportation. • Peter made an investment in GPS equipment, which he will use in his consulting business. He placed this in service on October 1, 2019, and paid $122,000. The equipment has a 7-year class life. He does not want to expense any of the cost under Section 179 or take bonus depreciation on the machine but will use MACRS to calculate his depreciation deduction in 2019. • Peter took a business trip to a client’s office during the year. He had no personal days on this trip. The expenses of the trip were: Ø Airfare - $605 Ø Lodging - $1,150 Ø Parking at the airport - $70 Ø Taxi from the airport to the hotel - $30 Ø Meals while traveling - $500 • Based on the advice of a friend, Peter made quarterly estimated tax payments (Federal tax) in anticipation of the tax he would owe on his consulting income in 2019, totaling $27,800. • The couple had the following transactions involving their investment assets during 2019: Ø Sold 500 shares of Day Enterprises on 2/14/2019 for $185,000. (Stock was inherited from Peter’s father, who died on November 28, 2018. The FMV of the stock on that date was $180,000; Peter’s father had purchased the stock for $170,000.) Ø Sold 100 shares of Harbaugh Inc. stock on 5/1/2019 for $25,000. (Stock was purchased on 1/2/2018 for $32,500.) Ø Sold 300 shares of Buckeye Corp. stock on 11/1/2019 for $100,000. (Stock was purchased on 11/1/2018 for $90,000). All of these transactions were reported to them on form 1099-B from their investment company, and the basis was reported to the IRS for all of these transactions. Assignment Instructions: Individually or with a partner, prepare the following for 2019: Form 1040; Forms 4562 (page 1 only) and Form 8949; Schedules 1, 2, and 3; and Schedules A, B, C , D, and SE for Peter Weber and Hannah Sluss. If working with a partner, please only submit one assignment, but be sure to indicate on the assignment the name of your partner. Note that you will be completing at 2019 tax return; make sure you are using the forms for the correct year; you will also need to make sure you are using the correct amounts (e.g. standard deduction, mileage, etc. for 2019). The assignment should be submitted on Carmen NO LATER than 12:00pm on Thursday, December 3rd. It is preferred if you upload your assignment as one document. Only your first Carmen submission will be graded. Absolutely no late submissions will be accepted.
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