Accounting
. (4) You are required to prepare Beth’s Federal income tax return only, not any state or local income tax return. ?
. (5) Beth is not blind for Federal income tax purposes. ?
. (6) Assume that the return is being timely filed. ?
. (7) Beth does not wish to designate a third party to discuss her return with the IRS. ?
. (8) Beth lists her occupation as “Accountant” at the bottom of page 2, Form 1040. ?
. (9) If Beth is overpaid, she wants the entire overpayment refunded to her by check. ?
. (10) Beth has never had an interest in or a signature or other authority over a financial account in a foreign country, nor have she ever been the grantor of or transferor to a foreign trust. ?
. (11) Even if Beth’s medical and dental expenses do not exceed 10% of her AGI, she wants to report them, to the extent deductible, on Schedule A, line 1, as a means of keeping track of her total year-to-year. ?
. (12) Relative to Beth’s two businesses – the part-time tax practice and the writing of software programs – take note of the following: [1] each business should appear on a separate Schedule C (not Schedule C-EZ); [2] Beth uses her home address as the business address for both businesses; [3] she does not have a separate business name for either business; [4] on the Schedule C for the part-time tax practice, the principal business for line A is “Tax Practice” and the business code for line B is 541213; [5] on the Schedule C for the business of writing software programs, the principal business for line A is “Software Program Writer” and the business code for line B is 541510; [6] both businesses use the cash basis, [7] she materially participates in both businesses, [8] all of her investment is “at-risk;” [9] neither business made any payments in 2014 that would require Beth to file Form(s) 1099; and [10] both businesses were started prior to 2014. ?
. (13) To the extent that Beth has reportable employee business expenses be sure that they appear on Form 2106 (not Form 2106-EZ). ?
. (14) Further assumptions, information, or clarification may be provided through Sakai or e-mail based on student questions, so check for messages regularly. Do not make any additional assumptions in preparing the project unless you clear them with me first. If any other issues arise that I have not discussed herein, it is your responsibility to discuss them with me so that they can be addressed and resolved before the due date.
Facts:
1. Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (Federal employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth’s birthday is July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund. ?
2. During 2014, Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099-INT. She received total ordinary dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. All such dividend payments were “qualified,” and were reported by each corporation to Beth on a Form 1099-DIV. ?
3. The following information is shown on Beth’s Wage and Tax Statement (Form W-2) for 2014. ?
Line Description Amount
1 Wages, tips, other compensation ? $65,000.00
2 Federal income tax withheld ? 10,500.00
3 Social Security wages ? 65,000.00
4 Social Security tax withheld ? 4,030.00
5 Medicare wages and tips ?65,000.00
6 Medicare tax withheld ?942.50
15 State ? Arizona ?
16 State wages, tips, etc. 65,000.00 ?
17 State income tax withheld 1,954.00 ?
4. Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2014. On her 2013 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld by her employer. She was not subject to the alternative minimum tax in 2013. ?
5. Fees earned from Beth’s part-time tax preparation practice in 2014 totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service. To the extent that this amount is deductible, report it on line 10, Part II, of the Schedule C for her tax practice business. She had no other expenses associated with this business. ?
6. Beth made the following sales of corporate stock in 2014:
? On September 12, 2014, she sold 500 shares of Gray Corporation common stock for $14 per share. She had bought the shares for $17.60 per share on February 8, 2014. ?
? On December 19, 2014, she sold 100 shares of Blue Corporation common stock for $55 per share. She had bought the shares for $30 per share on January 2, 2014. ?Beth received a Form 1099-B from her stockbroker regarding the sale of both the Gray and Blue Corporation shares. Box “B” was checked, indicating that “basis was not reported to the IRS.” ?
7. Beth bought a used sport utility vehicle for $6,000 on June 6, 2014. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, 2014, she sold the vehicle to a friend for $6,500. This transaction was not reported on Form 1099-B. ?
8. During 2014, Beth recorded revenues of $16,000 from the sale of a software program she developed. Beth incurred the following expenditures, all 100% business-use, in connection with her software development business:
Personal computer? $7,000
Office furniture? 5,000
Supplies? 650
Fee paid to computer consultant 3,500
Beth elects not to utilize first-year additional depreciation but will elect to expense the maximum portion of the cost of the computer and office furniture allowed under the provisions of § 179. To the extent, if any, not deductible under § 179, Beth will use the most accelerated method of cost recovery legally permissible. The computer and office furniture were placed in service on January 15, 2014. Beth has written evidence to support that these assets were used 100% in her business. Assume that the computer is not “listed property.”
To the extent that the supplies are deductible, report them on line 22, Part II, of Schedule C for her software program writing business. To the extent that the fee paid to the computer consultant is deductible, report it on line 10, Part II, of the same Schedule C.
9. Although her employer suggested that Beth attend an out-of-state convention on current developments in corporate taxation, Beth was not reimbursed for the travel expenses of $1,420 she incurred in attending the convention. The $1,420 was comprised of $200 for the cost of meals and $1,220 for transportation and lodging. To the extent deductible, the cost of the convention is 100% related to her employment. None of the cost is related to or allocable to either of her two business activities. ?
10. During 2014, Beth paid $300 for prescription medicines and $2,875 in doctor and hospital bills. Medical insurance premiums were paid for her by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage (related to the purchase of her principal residence; outstanding balance on the loan at December 31, 2014 was $85,000) was $3,845 (reported on Form 1098), and interest paid to credit card companies on her 100% personal use credit cards was $320. Beth made charitable contributions by check during 2014 totaling $2,080 ($30 each week to her church and $10 each week to the United Way for 52 weeks). Both charities are qualified and provided receipts to Beth confirming the donations. Unreimbursed professional dues and subscriptions, relating 100% to her employment with Mesa Manufacturing Company, totaled $350. Beth kept all of her receipts from personal purchases made during 2014. The total of Arizona general sales taxes reflected on these receipts was $1,785. She opts to use this amount for purposes of Schedule A, instead of using the optional sales tax table amount. ?
11. Beth made timely quarterly estimated Federal income taxes for 2014 of $1,000 ($250 per quarter was paid on each of the following dates: April 15, June 15, September 15 of 2014, and January 15, 2015). ?
Required:
In accord with the above, prepare a complete 2014 Federal income tax return for Beth R. Jordan in proper form. Your project solution should minimally contain Form 1040 (pages 1 – 2), Schedule A, Schedule B, two separate Schedule Cs, Schedule D (pages 1 – 2), two separate Forms 8949, Schedule SE, Form 2106, and Form 4562.