ACCTG406 PSU 2018 Federal Income Tax Return Assignment

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ACCTG406

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Tax Return Problem Due at beginning of class – April 15, 2019 (Forms available at: http://www.irs.gov/formspubs/ ) Directions: Prepare 2018 federal income tax return, including all necessary schedules and attachments, for Donald and Melania Trump using the following information: Social Security Numbers: Donald- 123-45-6789, Melania – 333-222-111 Son –Barron – age 11 - SS# 555-77-6666. Melania paid $4,500 in child care expenses for Barron while she worked. Salary: Donald - $35,000, Melania – $15,000 Barron – $600 Interest from Mellon Bank - $10,000, Interest on New York municipal bonds - $4,000 Dividends on Trump, Inc. stock – 5,000 Sold 1,000 shares of IBM stock for $8,000 on January 15, 2018. Shares were purchased on January 15, 2008 for $3,000. Melania had the following operating results from her modeling business, which she operated as a sole proprietorship: Sales income - $10,000 Office supplies - 4,000 Advertising Expenses - 2,000 Entertainment expense – 1,000 Donald and Melania rented out the old family home in New York for the entire year: Rental income - $9,000, Mortgage interest - $3,000 Depreciation - The house was purchased in 12/01/16 at a cost of $100,000 and is depreciated on a straight-line basis over 27.5 years. Accumulated Depreciation from prior years was $3,788. Mortgage interest on the white house owned by Donald and lived in by family - $4,000 Real Estate taxes on the white house - $7,000; State income taxes withheld from Donald’s wages - $4,000 Federal income taxes withheld from Donald’s wages - $6,000 New York City sales tax paid by Donald was $1,800. State income tax refund of 2017 overpayment received in 2018 - $3,000 (2017 state income taxes were fully deductible on the 2017 tax return.) Donald had $6,000 of business travel expenses, which were reimbursed by his employer. Melania paid $3,000 in college tuition for graduate school and $500 for eyeglasses. Donald contributed $7,000 to the United Way, and $2,000 to Fordham University during the year. Melania paid $4,000 of student loan interest. Notes 1. Please make up any non-financial information needed to complete the tax return that is not provided above. Extra Credit – To potentially assist in improving one’s grade to a “B-“, “C” or “D”, complete a separate tax return for Donald and Melania, adding the additional information found below: Sold 1,000 shares of GM stock for $4,000 on January 15, 2018. Shares were received as a gift from Ivanka, on January 15, 2016. Ivanka purchased stock on January 1, 1999 for $9,000. The value of the stock on January 15, 2016 was $6,000. Donald received $19,000 in social security benefits during the year. Donald paid $6,000 in alimony and $10,000 in child support to his first wife, Stormy. The couple was divorced in 2015. Melania’s law business purchased the following assets in 2018: 7 year equipment - $2,000 on Nov 30 5 year equipment - $1,000 on Dec. 15 (Please maximize her 2018 depreciation deduction.) Unreimbursed medical expenses - Dr. appointments for Donald and Melania - $6,000 - Dr. appointments for Barron - $5,000 - Prescription drugs - $3,000 - Melania’s eye glasses - $500 - Medical insurance premiums - $2,500 Donald and Melania also have a twenty year old daughter, Hilary. Hilary is a full-time graduate student and Donald paid $7,000 of tuition and 2,500 for food, on her behalf. Hilary had no other expenses during the year. Donald bought business suits for $5,000 that he wears only to the office and for official work events. Donald pays $1,500 in union dues related to his employment. Melania paid $400 for professional licenses. Donald and Melania like to eat out and spent $5,000 at various restaurants in the D.C. area.
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Explanation & Answer

Attached.

Form

1040 U.S. Individual Income Tax Return 2018
(99)

Department of the Treasury—Internal Revenue Service

Filing status:

Single

Married filing jointly

Your first name and initial

Qualifying widow(er)
Your social security number

Someone can claim you as a dependent

If joint return, spouse's first name and initial

Spouse is blind

Head of household

IRS Use Only—Do not write or staple in this space.

Last name

Your standard deduction:

Spouse standard deduction:

Married filing separately

OMB No. 1545-0074

You were born before January 2, 1954

You are blind
Spouse’s social security number

Last name

Someone can claim your spouse as a dependent

Spouse was born before January 2, 1954

Spouse itemizes on a separate return or you were dual-status alien

Home address (number and street). If you have a P.O. box, see instructions.

Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6.

Dependents (see instructions):
(1) First name

(2) Social security number

Full-year health care coverage
or exempt (see inst.)
Presidential Election Campaign
(see inst.)
You
Spouse
If more than four dependents,
see inst. and ✓ here ▶

(3) Relationship to you

Last name

(4) ✓ if qualifies for (see inst.):
Child tax credit
Credit for other dependents

Sign
Here

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Joint return?
See instructions.
Keep a copy for
your records.



Paid
Preparer
Use Only

Your signature

Date

Your occupation

Spouse’s signature. If a joint return, both must sign.

Date

Spouse’s occupation

Preparer’s name

Preparer’s signature

PTIN

If the IRS sent you an Identity Protection
PIN, enter it
here (see inst.)
If the IRS sent you an Identity Protection
PIN, enter it
here (see inst.)
Firm’s EIN
Check if:
3rd Party Designee

Firm’s name



Phone no.

Self-employed

Firm’s address ▶

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 11320B

Form

1040 (2018)

Page 2

Form 1040 (2018)

Attach Form(s)
W-2. Also attach
Form(s) W-2G and
1099-R if tax was
withheld.

Standard
Deduction for—
• Single or married
filing separately,
$12,000
• Married filing
jointly or Qualifying
widow(er),
$24,000
• Head of
household,
$18,000
• If you checked
any box under
Standard
deduction,
see instructions.

Refund
Direct deposit?
See instructions.

1

Wages, salaries, tips, etc. Attach Form(s) W-2 .

.

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1

2a

Tax-exempt interest .

.

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3a

Qualified dividends .

.

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2a

b Taxable interest

.

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2b

3a

b Ordinary dividends

.

.

4a

3b

IRAs, pensions, and annuities .

4a

b Taxable amount

.

.

.

4b

5a

Social security benefits

5a

b Taxable amount

.

.

.

5b

6
7

Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22
. . . . .
Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise,
subtract Schedule 1, line 36, from line 6
. . . . . . . . . . . . . . . . .

6

8

Standard deduction or itemized deductions (from Schedule A) .

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.

.

.

.

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8

9

Qualified business income deduction (see instructions) .

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9

10

Taxable income. Subtra...


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