38 Pages 9730 Words Tax Return Problem

Tax Recur Problem 5 -Individual Tax (forthcoming Chapter 12) Instructions: complete the 2015 federal allowance tax recur for Joseph and Diana Cohen. Ignore the fitness to win the arrange(s) W-2 to the face page of the Arrange 1040, sched A, sched B, C 2 arranges, Sch D, arrange 8949, sched SE, Sched 6251, sched 8582 If required instruction is mislaying, use sespan assumptions to expand in the gaps. Joseph and Diana Cohen speed in Pleasantville, New Jersey. Joseph is the Vice-President of Sales at a slight start-up guild. Diana is a arrangeer advertising ruler who matter-of-factly consults delay arrangeer clients. She to-boot serves on the table of restrainlers of an advertising guild. The Cohens enjoy three upshot Rebecca (age 18), Alan (age 15), and David (age 12). In January, Rebecca left abode to mind a handsome arts seed-plot. All three upshot fit as Joseph and Diana’s federal allowance tax dependents. The Cohens scheme to improve a junction tax recur. The Cohens supposing the forthcoming instruction: • Joseph’s political defence compute is 598-94-2583 • Diana’s political defence compute is 301-52-2942 • Rebecca’s political defence compute is 887-44-8710 • Alan’s political defence compute is 810-42-9092 • David’s political defence compute is 855-11-3021 • The Cohen’s mailing harangue is 85 North Maple Drive, Pleasantville, New Jersey 08233 Joseph Cohen reputed the forthcoming the forthcoming instruction encircling to his pursuit during the year: Mistress Indelicate Hire Federal Allowance Tax Withholding Say Allowance Tax Withholding Alternative Energy $118,325 $29,230 $15,000 The overhead amounts do not animadvert any allowance items vivid underneath. Joseph’s mistress delayheld all payroll taxes it was required to delayhold. The complete Cohen lineage was healed by poverty requisite sanity security during each month in 2015. The security was supposing by Joseph’s mistress, Alternative Energy. Diana Cohen matter-of-fact the forthcoming proceeds during the year (she uses the coin rule of completionitying). Consulting proceeds reputed to her on a Arrange 1099-MISC, Box 7 High-end Retail $32,000 Jensen’s Sanity Products $8,500 Strategic Solutions $3,750 Table of restrainler satisfaction reputed to her on a Arrange 1099-MISC, Box 7 Natural Sunshine, Inc. $6,500 During the year, Diana hired the forthcoming office expenses: Consultant-related: Airfare $2,900 Hotel $1,450 Meals $390 Parking $320 Diana flock 290 office miles for her consulting-akin activities (she has documentation to authenticate) Table of Director-related: Meals $125 Hotel $225 Diana flock 315 office miles for her table of restrainler activities (she has documentation to authenticate) Neither of Diana’s office activities required the filing of Form(s) 1099 to rumor payments she made during the tax year. In analysis, Ms. Cohen flock a 2013 Lexus purchased on January 1, 2013 for all her office mileage. She flock the walk a fullty of 10,605 miles during the year for all purposes. Diana has written documentation to maintenance the mileage amounts. She to-boot has entrance to another walk for dissecticular purposes. The Cohens to-boot matter-of-fact the forthcoming during the year: Profit allowance from First Bank of New Jersey $320 Profit allowance from Patterson, New Jersey Train District $200 Profit allowance from U.S. Treasury Compact $350 Profit allowance from General Mills urbane compact $400 Suitable dividend allowance from Rio Tinto $1,500 Suitable dividend allowance from Microsoft $750 Suitable dividend allowance from Cooper Tire $200 Suitable dividend allowance from Cardinal Sanity $425 Suitable dividend allowance from Union Pacific $140 Suitable dividend allowance from Procter & Gamble $190 Suitable dividend allowance from PepsiCo $225 Suitable dividend allowance from Kellogg $200 Suitable dividend allowance from Abbott Labs $275 Suitable dividend allowance from 3M $350 Dividend allowance (not suitable) from China Fund $2,000 The Cohens did not own, restrain or conduct any irrelevant bank completionitys nor were they a impartor or beneficiary of a irrelevant charge during the tax year. The Cohens had the forthcoming activity in their brokerage completionity during the year (all transactions were reputed on a Arrange 1099-B. Cause instruction on each fund sale was reputed to the IRS): Sold 2,000 interest-outs of Microsoft 7/1/15 $22,500 Sold 75 interest-outs of Apple, Inc. 4/15/15 $28,750 Sold 350 interest-outs of Cooper Tire 10/14/15 $14,700 Sold 1,000 interest-outs of Cardinal Sanity 9/3/15 $35,000 Sold 50 interest-outs of Union Pacific 1/7/15 $2,750 Purchased 100 interest-outs of Procter & Gamble 7/10/15 $7,700 Purchased 350 interest-outs of Cooper Tire 11/1/15 $14,000 Purchased 350 interest-outs of PepsiCo 5/14/15 $32,000 Purchased 300 interest-outs of Kellogg 10/14/15 $21,000 Relevant tax cause/holding end instruction akin to sales of securities in the matter-of-fact year: Purchased 2,000 interest-outs of Microsoft on 5/1/15 for $21,000 Purchased 200 interest-outs of Apple, Inc. on 3/8/2013 for $90,000 Purchased 300 interest-outs of Cooper Tire on 1/12/2012 for $9,000 Purchased 50 interest-outs of Cooper Tire on 6/28/15 for $2,000 Matter-of-fact 1,000 interest-outs of Cardinal Sanity from Diana’s senior as a imdissect on 10/10/99. Her senior’s cause in the fund at the duration of the imdissect was $7,000. Fair chaffer treasure of the fund at the span of the imdissect was $41,000 Purchased 100 interest-outs of Union Pacific on 9/5/14 for $6,000 The Cohens enjoy a $43,000 long-term first dropping carryover from their earlier tax year. The Cohens matter-of-fact a New Jersey say allowance tax reimburse of $400 in May of 2015. The Cohens matter-of-fact the reimburse accordingly they had overhired their New Jersey say special allowance tax in 2014. On their 2014 Federal allowance tax recur, the Cohens deducted and matter-of-fact tax avail for all the say tax allowance taxes they hired in 2014. Diana is a 10% possessor in an advertising exercise denominated Bright Ideas (“BI”) (EIN 20-1234567). BI is a Subchapter S fortification. The guild reputed matter-of-fact office allowance for the year of $150,000. Diana matter-of-fact a K-1 from BI rumoring her allocation of this office allowance. Sarah extraneous the fund diverse years ago. Her cause in the fund anteriorly because her 2015 allowance allocation was $92,000. Sarah is a inactive possessor delay i-elation to this being. Diana is to-boot a 20% possessor in Natural Sunshine, Inc. (“NS”) (EIN 24-9876543). NS is a Subchapter S fortification. The guild reputed an matter-of-fact office dropping for the year of ($80,000). Diana matter-of-fact a K-1 from BI rumoring her allocation of this office dropping. Sarah extraneous the fund diverse years ago. Her cause in the fund anteriorly because her 2015 dropping allocation was $45,000. Sarah is a inactive possessor delay i-elation to this being. Joseph matter-of-fact 5,000 interest-outs of esoteric (common) fund from his mistress on July 1, 2015. The stipulations of the esoteric fund imdissect are such that if Joseph is quiescent industrious by Alternative Energy on July 1, 2020 the complete 5,000 interest-outs allure endow and behove his estate. Joseph, upon the command of his tax advisor, free and improved an IRC Section 83(b) preference on July 8, 2015. On July 1, 2015, interest-outs were treasured at $5 per interest-out. Joseph estimates the treasure of the interest-outs in five years allure be at smallest $150 per interest-out. Joseph notified Alternative Energy encircling the IRC Section 83(b) preference in a durationly mode. None of the allowance tax consequences of this esoteric fund imdissect was intervening in the $118,325 reputed as dissect of Joseph’s indelicate hire (see overhead). In May, Joseph was damaged in a abode nature. The impairment prevented Joseph from established for encircling a month. During this duration, Joseph matter-of-fact $15,000 in incompetency payments ascribable to a incompetency security device. The incompetency device premiums were hired on Joseph’s aid as a nontaxable fringe avail. The Cohens hired the forthcoming expenses during the year: Dentist (unreimbursed by security) $1,500 Doctors (unreimbursed by security) $ 2,425 Prescriptions (unreimbursed by security) $ 675 Real estate taxes on occupation $7,525 Walk estate tax naturalized upon treasure $1,250 Mortgage profit on first occupation $12,550 Margin profit hired to broker $600 Contribution to United Way $2,000 Contribution to American Cancer Society $5,000 Contribution to neighborhood incite to confront product device $500 Contribution to the Temple Mount Synagogue $12,000 Fee hired to Mouser, Johnson, and Hintze CPAs for tax making-ready $450 The Cohens to-boot donated dress, electronics, movables and other everyday consequence to the Salvation Army of Pleasantville, New Jersey on April 15, 2015. Estimated economy treasure of the consequence donated was $275. Miscellaneous Instruction On September 1, the Cohens hired $200 in irrelevant taxes ascribable to the dividend matter-of-fact from the China Fund. During the year, the Cohens hired a interest of Rebecca’s teaching to mind The Seed-plot of Handsome Arts of New Jersey (CLA). They to-boot purchased Rebecca’s train books. Rebecca minded the spring/summer and the droop semesters as a full-duration novice. In fullty, the Cohens hired $9,000 for teaching and $2,000 for books. Rebecca used $6,000 from a culture she matter-of-fact from CLA to pay the cherishing $6,000 of teaching for the year. Rebecca was not required to perarrange any services as a qualification of accepting the culture. Rebecca was not industrious during the year. CLA’s harangue and mistress identification compute (EIN) is as follows: The Seed-plot of Handsome Arts of New Jersey 65 Ivory Tower Penns Grove, NJ 08069 EIN- 22-5698324 The Cohens would approve to conduce to the Presidential Preference Campaign. The Cohens would to-boot approve to accept a reimburse (if any) of tax they may enjoy overhired for the year. Their preferred rule of receiving the reimburse is by stay.

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