South Western Federal Taxation 2016 Pdf Download UPDATED
South Western Federal Taxation 2016 Pdf Download
John R. and Anne L. Miller are married and live at 13071 Sterling Drive, Aitkin, MN 56431. John is a self-employed insurance claims adjuster (business activity code 524290), and Anne is the dietitian for the local school district. They cull to file a articulation revenue enhancement return each year.
1. John represents several national casualty insurance companies on a contract basis. He operates this business on the greenbacks basis. He is paid a retainer and receives boosted compensation if the claims he processes for the twelvemonth exceed a specified number. As an contained contractor, he is responsible for whatever expenses he incurs. John works out of an office about his home. The function is located at 1202 Motel Road. He shares Suite 326 with a fiscal consultant, and operating expenses are divided every bit between them. The suite has a common waiting room with a receptionist furnished and paid by the landlord. John paid his one-half share of the 2014 expenses as detailed below:
For his own business use, John purchased a $2,100 laptop estimator on June 17 and a $1,200 Nikon camera on Feb 5. Except for his vehicle (encounter item 2 below), John uses the § 179 write-off option whenever possible. John has no expenditures for which he is required to file Form 1099s.
two. On January 2, 2014, John paid $31,000 (including sales tax) to buy a gently used Toyota Camry that he uses 92% of the time for business organization. No trade-in was involved, and he did not claim any § 179 expensing. John uses the actual operating cost method to compute his tax deduction. He elects to use the 200% failing-balance MACRS depreciation method with a half-twelvemonth convention. His expenses relating to the Camry for 2014 are every bit follows:
In connection with his business use of the Camry, John paid $510 for tolls and $350 in fines for traffic violations. In 2014, John drove the Camry 14,352 miles for business and i,248 miles for personal use (which includes his daily, round-trip commute to work).
3. John handles almost merits applications locally, but on occasion he must travel out of town. Expenses in connection with these business trips during 2014 were $930 for lodging and $i,140 for meals. He also paid $610 for business dinners he had with several visiting executives of insurance companies with whom he does concern. John's other concern-related expenses for 2014 are listed beneath:
4. Anne earns $32,000 working equally a registered dietitian for the Aitkin Public Schoolhouse District. The chore she holds, director of the schoolhouse lunch plan, is not classified every bit full fourth dimension. Consequently, she is not eligible to participate in the teacher retirement or health insurance programs. Anne's expenses for 2014 are summarized as follows:
In order to piece of work full time and earn a larger salary, Anne practical for a position every bit chief dietitian for a chain of nursing homes. According to the manager of the recruiting service she hired, the position has non yet been filled and Anne is one of the leading candidates. The continuing education program was sponsored by the National Association of Dietitians and consisted of a ane-day seminar on special diets for seniors. Anne drove the family Chevrolet Malibu 930 miles on job-related utilize, out of a total of eight,670 miles driven for the year. The Millers purchased the motorcar on July xi, 2012, for $23,400. Anne uses the automated mileage method for computing whatsoever available deduction for business use of the motorcar.
five. The Millers have supported Gary Simon (Anne's widowed father) for several years, appropriately claiming him every bit a dependent for revenue enhancement purposes. On Dec 27, 2013, Gary suffered a massive stroke. The doctors did everything they could for Gary, but he died in the intensive care unit of Riverwood Hospital on January eight, 2014. In January and February of 2014, the Millers paid the following for Gary: medical expenses of $11,800 not covered by Medicare ($6,000 incurred in 2013 and $5,800 in 2014) and funeral expenses of $fifteen,300. Gary's wellness insurance was limited to his Medicare coverage considering the Millers' medical insurance (run across item iii above) but covered John, Anne, and their sons. Gary'southward volition named Anne as executor and sole heir of his estate.
6. One of the assets that Anne inherited with the transfer of Gary'south estate was his house. Upon the advice of the financial consultant who shares role infinite with John, the Millers decided to catechumen Gary'south home into a furnished rental business firm. After several minor repairs (e.g., touching upward the paint on the interior walls, replacing various window screens, pressure washing the brick exterior, etc.), the property was advertised for rent in the classified section of the local newspaper on March one, 2014. The repairs cost $720, and the paper ad was $360. Based on reconstructed records and appraisal estimates, data about the property is as follows:
7. Gary's quondam residence was rented nearly immediately with occupancy commencing April 1, 2014, under the following terms: one-twelvemonth lease; $2,400 per month due the kickoff mean solar day of the month; first and last calendar month's rent in advance; $2,000 impairment deposit; lawn care included but non utilities. The tenant complied with all terms, except the December rent payment was not made until January 1, 2015—the tenant took an extended vacation trip that started on Thanksgiving Day (November 27) through Christmas Day (December 25). Expenses in connection with the property were every bit follows: belongings taxes, $2,600; repairs, $320; lawn maintenance, $540; insurance, $i,800; and street paving assessment, $ii,100. The property is located at 12120 Lake Road, Aitkin, MN 56431. (Note: If you are using H&R Cake software, input 365 in the "days owned" box and in the "days rented" box. Otherwise, the program will apportion the expenses inappropriately.)
8. In early December 2013, a friend brash John to buy stock in Pioneer Aviation, Inc. (PAI). At that time, PAI was in serious financial straits and was headed toward defalcation. Nevertheless, co-ordinate to John'due south friend, the value of the corporation'due south underlying assets was such that the shareholders were bound to recover considerably more than than the current market cost of $.50 per share. Excited at the chance for a "sure" turn a profit, on December xv, 2013, John purchased 20,000 shares for $10,000. In September 2014, the trustee in defalcation announced that the stock was worthless and that even some of PAI'southward preferred creditors would not be paid.
9. On June 14, 2014, the Millers sold 500 shares of Garnet Corporation for $17,500 ($35 per share). They owned ane,000 shares, acquired as follows: 500 shares on Nov 5, 2013, for $25 a share and 700 shares on April 5, 2014, for $30 a share. The Millers did non instruct their broker as to which shares to sell, and then Form 1099–B for this sale reported $12,500 basis for these shares.
10. One calendar month before she died on April fourteen, 2005, Violet Simon (Anne'due south mother) gave Anne a coin drove. Based on conscientious records that Violet kept, the collection had a cost basis of $ix,000 and a off-white market place value of $18,000 at the time Violet passed away. On February 12, 2014, the Miller residence was burglarized and the coin drove was stolen. The Millers filed a claim with the carrier of their homeowner'southward insurance policy for $24,000 (the current value of the collection). Unfortunately, all they were able to collect was $10,000, which was the maximum pay-out allowed for valuables (e.g., jewelry, antiques) without a special rider attached to the insurance policy.
11. In her will, Violet Simon (see item 10) left Anne a vacant lot on Mississippi Route. Violet had paid $fifteen,000 for the property, and it had a value of $19,000 when she died. Violet had purchased the lot because information technology was next to a school that she expected to aggrandize. Past 2014, it has go articulate that the Mississippi Road area of Aitkin is not growing and that no school expansion will take place. Consequently, on July 1, 2014, Anne sold the lot for $nineteen,000. Non included in this cost are unpaid holding taxes (and involvement on the unpaid taxes) of $700 on the lot, which the purchaser assumed and after paid. Form 1099–B did non report the basis of this property.
12. Every year around Christmas, John receives cards from various automobile repair facilities (including dealerships) expressing thanks for the business referrals and enclosing greenbacks. John has no arrangement, contractual or otherwise, that requires any compensation for the referrals he makes. Concerned about the legality of such "gifts," John consulted an attorney virtually the matter a few years agone. Without passing judgment on the status of the payors, the attorney found that John's acceptance of the payments does not violate state or local police force. John sincerely believes that the payments he receives take no effect on the referrals he makes. During Dec 2014, John received cards containing $seven,200. One additional carte du jour containing $900 was delayed in the mail and was not received past John until January 4, 2015.
xiii. In addition to those previously noted, the Millers' receipts during 2014 are summarized below:
14. On June 7 and 8, 2014, the Millers held a garage sale to dispose of unwanted furniture, appliances, books, bicycles, clothes, and one boat (including trailer). The estimated ground of the items sold is $25,500. All assets were used by the Millers for personal purposes.
15. Payments fabricated for 2014 expenditures not mentioned elsewhere are as follows:
The Millers' medical insurance does not cover dental services. The Millers pledge contributions of $1,200 per year to their church. In 2014, they paid the pledges for 2013–2015. During 2014, the Millers drove the Malibu 270 miles for medical purposes (e.k., trips to the hospital, md and dentist offices) and 320 miles delivering meals to the poor for Meals-on-Wheels, a qualified charity.
sixteen. The Millers have 2 sons who live with them: Trace and Trevor. Both are total-fourth dimension students. Trace is an accomplished vocalist and earned $iv,200 during the year performing at special events (e.g., weddings, anniversaries, borough functions). Trace deposits his earnings in a savings account intended to aid cover futurity college expenses. Trevor does not have a job.
17. The Form Due west–2 Anne receives from her employer reflects wages of $32,000. Appropriate amounts for Social Security and Medicare taxes were deducted. Income tax withholdings were $one,320 for Federal and $ane,056 for country. The Millers made quarterly tax payments of $two,000 for Federal and $600 for state on each of the post-obit dates: April fifteen, 2014, June 16, 2014, September 15, 2014, and December 29, 2014. None of the Millers concur whatsoever strange fiscal accounts. Relevant Social Security numbers are noted below:
Fix an income taxation return (with all advisable forms and schedules) for the Millers for 2014 following these guidelines:
• Make necessary assumptions for data not given in the problem simply needed to consummate the return.
• The taxpayers are preparing their own return (i.east., no preparer is involved).
• The taxpayers have substantiation (due east.g., records, receipts) to back up all transactions for the year.
• If whatever refund is due, the Millers want a refund check sent to them past mail.
• The Millers had itemized deductions from AGI for 2013 of $16,700, of which $1,500 was for state and local income taxes.
• The Millers do not want to contribute to the Presidential Election Campaign Fund.
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