Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Taxation Expert

Facts:
 
James (age 58, SS# 123-34-4439) and Martha (age 56; SS# 233-23-9050) Williams are married. James works at a major retailer as manager of the early shift. Martha is a nurse at a local hospital. James’ salary (including semi-annual bonus) was $58,000 (federal withholding $12,000); Martha’s salary was $46,000 (federal withholding $4,500). They live on 3530 Small Way, in Reno, NV.
 
Rental Activity:
 
The Williams purchased a duplex on 452 Main Street in March two years ago for $82,000 (cost of land was $14,000). In the current year, they had rental income of $6,000 (the renters were only in the house for part of the year; they moved out on August 31). Expenses on the rental property (for the entire year) were:

Mortgage interest expense      $6,500
Property taxes                      $700
Home owner’s insurance          $540
Repair & maintenance             $630
Other expenses                     $475
 
Investments:
 
The Williams have some investment income from stocks and bonds that they inherited from Martha’s grandmother many years ago:
 
Dividend Income from KPO Stock                                             $500
Dividend Income from LKT Stock                                              $430
Interest Income from IBM Bonds                                              $200
Interest Income from Local Independent School District bonds      $300
 
The Williams sold 100 shares of Apple, Inc. stock (AAPL) on September 19. The Williams had inherited the stock on March 5, 2010.
 
They also sold 1,000 shares Microsoft stock (MSFT) on September 19. This stock had been purchased in on May 23, 2008.
 
Selling expenses for both stock sales were $5.00 per share.
 
Partnership and S Corporation Income (Income from Schedule K-1)
 
James is a 25 percent partner of Good Company Partnership. His share of the partnership’s income and losses is as follows:

Ordinary Income                $12,000
Charitable Contributions      $2,000    (line 8)
Long-term Capital Losses    ($6,000)  (line 4e)
Interest Income                 $1,500    (line 4a)
 
Martha is a 10 percent shareholder of Better Corporation (a subchapter S corporation). She received a Schedule K-1 from Better Corporation listing the following items:

Ordinary Income                $5,000
Dividend Income                $1,000   (line 4b)
Short-term capital loss       ($2,000)  (line 4d)
 
Both activities are considered active activities (that means that James and Martha participate materially).
 
Other Information:
 
James and Martha’s son, Emil (age 23, SS# 455-10-1231) got into some trouble with the law last year. He spent six months in jail and was just released at the beginning of the year. Emil is married to Cindy (age 22; SS# 460-11-2322). They have a 1-year old son, Anton (SS# 545-13-2233). In order to help Emil and Cindy out, James and Martha agreed to have them live in their house from January through September. Emil did not work during that time and Cindy had a part-time job making $6,800 working at a grocery store checkout. In September, Emil found a job at a local construction firm which allowed him & Cindy to move into an apartment. Martha continued to provide free daycare service for Anton for the remainder of the year. Emil earned about $3,300 from September through December.
 
Unfortunately, the William’s main home value dropped significantly in the last four years. They decided that because they were “under water” with their mortgage, they would apply for a short sale. They qualified and sold their main home for $52,000 on October 11. They had originally purchased that house for $135,000 in February of 2002 (value of the land was $25,000 back then). Their mortgage was $122,000 when they sold the house. They moved into their rental property on Main Street in September (after Emil and Cindy had moved out). As soon as they had decided they were going to do the short sale, they stopped making house payments. Thus, interest payments on their mortgage and home equity loan were only $3,200 and $1,650 respectively. Property taxes were $1,075 and home owner’s insurance was $900.
 
In January, James’ aunt died. She left him and Martha an inheritance of $176,000. James also received $5,500 for being the executor of his aunt’s estate.
 
Martha Williams won a cruise in a raffle worth $1,200 (the cost of the raffle ticket was $15).
 
James had to have surgery on his back. The hospital costs were $22,000. Doctors’ fees were $5,800, and prescription medicine was $250. Their insurance only covered $10,000 of this procedure.
 
The Williams donated 200 shares of Dell stock to the local community college on April 11. Their basis was $3,000. The stock was acquired on various dates.
 
A severe storm with a flash flood damaged their new principal residence on Main Street on November 4.

The damage was estimated to be $16,000 (the value of the house before the flood was $64,000 after the flood damage it was $48,000).

Their insurance did not cover the damage, since they were not covered for flood losses. 
 
The Williams paid $1,200 interest on their car loans. They also paid property taxes for their cars of $318.
 
The Williams paid $375 for tax preparation and consulting.
 
All individuals in this case are U.S. citizens.  
 
Requirements:
 
1) Prepare a regular income tax return (form 1040 and all required forms and schedules) for James and Martha Williams (assume they are filing jointly).

2) Make up any addresses, social security numbers, names of employers, etc. where needed. Do not leave those lines blank!

3) Before making any assumptions, ask me to make sure.

4) Sign the return as paid preparer. You will be paid for your work with a grade.

Taxation, Accounting

  • Category:- Taxation
  • Reference No.:- M91158

Have any Question? 


Related Questions in Taxation

Discussion forumnote the video has closed captioning to

DISCUSSION Forum Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu. We are going to examine substitute goods, h ...

Assignment tax issues associated with financial

Assignment: Tax Issues Associated with Financial Planning Understanding the tax consequences of your financial planning decisions is very important. These decisions may sometimes have life-long consequences in addition t ...

Assignmentaccess the latest annual report or form 10-k of a

Assignment Access the latest annual report, or Form 10-K, of a publicly-traded company of your choice using the company's website or www.sec.gov. You can usually access from a company's website by clicking on investor re ...

Criterion 11 which of the following is not a primary tax

Criterion 1 1. Which of the following is NOT a primary tax authority? a. Treasury Regulation b. Revenue Ruling c. a Tax Court Memorandum decision d. an IRS publication 2. Congress' authority to enact an income tax was es ...

Discussion question 1a law practice was incorporated on

Discussion Question 1 A law practice was incorporated on January 1, 2016, and expects to earn $25,000 per month before deducting the lawyer's salary. The lawyer owns 100% of the stock. The corporation (a personal service ...

Tax memoentity formationyou are a cpa in private practice

Tax Memo:Entity Formation You are a CPA in private practice and a client of yours comes into your office and tells you he is starting a new business. He tells you that he will be starting a bungee jumping school. He says ...

Research paper of gift taxestate tax systemwrite a research

Research Paper of Gift Tax/Estate Tax System Write a research paper explain tax popic of Gift Tax /Estate Tax System the follow must be addressed: 1.what is the tax benefit or tax implication of this topic? 2.Who does it ...

Tax projectour tax project has changed slightly due to the

TAX PROJECT: Our tax project has changed slightly due to the Presidential Election Year. Your project is to prepare a document, no longer than five pages, reviewing and addressing the following: - Tax policy of Democrati ...

Tax research problem grayling companyi need to do a tax

TAX RESEARCH PROBLEM (Grayling Company) I need to do a tax research problem in the following way: Complete tax research on assigned tax problem utilizing the following tax research methodology, and communicate such in a ...

Assignmentchapter 5problem 24at the start of the current

Assignment CHAPTER 5 PROBLEM # 24 At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue's current E & P is $60,000, and at the end of the year, it distribut ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen