Problems: Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Tax Return
Problem Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (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
was born on July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to
the Presidential Election Campaign Fund.
The following information is shown on Beth’s 2013 Wage and Tax Statement (Form W–2)
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
1,650.00
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 qualified dividends of $800
from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth’s dividend payments
on a Form 1099–DIV.
Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2013. On
her 2012 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld
by her employer.
Fees earned from her part-time tax practice totaled $3,800. She paid $600 to have the tax
returns processed by a computerized tax return service.
On February 8, 2013, Beth bought 500 shares of Gray Corporation common stock for $17.60 a
share. On September 12, Beth sold the stock for $14 a share.
Beth bought a used sport utility vehicle for $6,000 on June 5, 2013. She purchased the
vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, she sold the vehicle to a friend for $6,500.
On January 2, 2013, Beth acquired 100 shares of Blue Corporation common stock for $30 a
share. She sold the stock on December 19 for $55 a share.
During 2013, Beth received royalties of $16,000 on a software program she had writ- ten.
Beth incurred the following expenditures in connection with her software-writing activities
Cost of personal computer (100% business use)
$7,000
Cost of printer (100% business use)
2,000
Furniture
3,000
Supplies
650
Fee paid to computer consultant
3,500
Beth elected to deduct the maximum portion of the cost of the computer, printer, and furniture allowed under the
provisions of § 179. These items were placed in service on January 15, 2013 and used 100 percent in her business.
Although her employer suggested that Beth attend a convention on current developments in corporate taxation, Beth was
not reimbursed for the travel expenses of $1,420 she incurred in attending the conference. The $1,420 included $200 for meals.
During 2013, Beth paid $300 for prescription medicines and $2,875 in physician and hospital bills. Medical insurance
premiums were paid by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage was $3,845, and
interest paid to credit card companies totaled $320.
Beth contributed $30 each week to her church and $10 each week to the United Way. Professional dues and subscriptions
totaled $350. Beth maintained her sales tax receipts, showing total taxes paid of $1,954
Beth paid $1,000 in estimated Federal income taxes throughout the year.
Part 1- Tax computation
Compute the 2013 net tax payable or refund due for Beth R. Jordan. If you use tax forms for your solution, you will need Forms 1040,
2106–EZ, and 4562 and Schedules A, B, C, D, and SE. Suggested software: H&R BLOCK Tax Software.