The Income Tax Return may be prepared manually or using
the PROSERIES (TURBOTAX)
software (or some other Federal Income Tax (or Information) software that you
may have access to) that is located on the Network System in the Computer
Center on the Eight floor (South) at the University Of Houston-Downtown Campus
(and the second floor classrooms in the Shea Street College Of Business
Building) (or on the personal computers at UHD-Northwest at Lone Star College-University Park). If you choose
to prepare the Income Tax (or Information) Return using the ProSeries
(TurboTax) software in the Computer Center (or at UHD-Northwest at Lone Star College-University Park), the following information applies. The ProSeries (TurboTax) software may be
accessed from any personal computer in the Computer Center that is connected to
the Network System at the University Of Houston-Downtown Campus (or on the personal
computers on the personal computers at UHD-Northwest at Lone Star College-University Park). Please bring a
device to the Computer Center in order
to save your data. (Please be sure that
the device is capable of saving your data).
To assist you in using the ProSeries (TurboTax) software, an operator's
manual is available in the Computer Center (or at UHD-Northwest at Lone Star College-University Park). Below is a
listing of basic instructions in operating the software.
Click on START
and enter "PROGRAMS" and locate "ProSeries 2014". Click on "2014 ProSeries". The software will appear on the screen.
CREATING CLIENT/INPUTTING DATA
Click on "New" to create a new
client. The first document that you will
enter (automatically appears on the screen) will be the "Federal Information
Worksheet". Complete all necessary
information on the "Federal Information Worksheet". To enter specific tax related information,
you must enter the form, schedule or document that relate to the tax related
information you wish to enter. For example,
to enter information for wages earned by the taxpayers, go to "Form
W-2" and enter the appropriate information; to enter information for a
self-employed person, go to "Schedule C" and enter the appropriate
information; to enter information regarding rental property, go to
"Schedule E" and enter the appropriate information, etc. To go to a specific form or document, you may
either click on "Forms" (and then click on “Select Form”), hit
the "F6" key or hit "Control F" then highlight the desired
form, schedule or document (or press the lighted letter(s) and/or number(s) of
the desired form, schedule or document) and press return (enter).
In many cases, information may (or must) be entered into
a worksheet which is automatically transferred to where needed in the
respective Income Tax Returns. This is
especially true for Schedule E (Rental Property) for entering information for
Rental Property, etc. Accordingly, pay
attention to the many worksheets that are available for the Return you are
preparing to see if certain information may (or must) be entered through a
worksheet instead of directly in the Forms and/or Schedules of the Income Tax
To enter depreciation information, either click on
"Forms" (and then click on “Select Form”), hit the
"F6" key or hit "Control F" and enter the "Depr Entry
Wks". Enter a description of the
asset to be depreciated and press return (enter). Highlight the Form or Schedule the asset
relates to and press return (enter). Complete
the necessary information at the top of the "Asset Entry
Worksheet". The computed
depreciation will automatically be transferred to the appropriate Form or
Schedule that the asset relates. (If the
Form or Schedule that the asset relates has not been previously created, you
will be asked to create the Form or Schedule at this time).
To access the print commands, press "Control
P" and click on “Tax Returns” then press return (enter) to print the
entire Tax Return. If you desire to
print one (1) Form or Schedule at a time, click on the printer on the tool bar
with the red arrow, then click on "Choose" and select the
desired Form or Schedule to print.
DO NOT ALTER ANY
OF THE DEFAULT SETTINGS IN THE SOFTWARE.
This Income Tax Project requires for the preparation of
a 2014 Federal Income Tax
Return. Therefore, the following
Deduction for Married Filing Jointly - $12,400.
2. Personal And
Dependency Exemption amount - $3,950.
3. Standard Mileage Rate - $.56 per business mile.
4. The 2014 Tax
Rates (Please see inside front cover of textbook).
INDIVIDUAL INCOME TAXATION
FALL SEMESTER 2015
INCOME TAX PROJECT
John Alan Kelly and Rosalyn Elaine Kelly, a married
couple, live at 3822 Robin Lane Houston, Texas 77049-7236. Their home telephone number is (713)
468-9721, home fax number is (713) 591-7014, cell telephone number for John is
(832) 921-8427 and cell telephone number for Rosalyn is (832) 366-8122. John, whose social security number is
437-29-1297 and date of birth is April 2, 1963, is employed as a Loan Officer
with Houston First National Bank located at 1100 Smith Street Houston, Texas
77002-0002 and whose Employer Identification Number is 42-4732689. John's work telephone number is (713)
654-8739 and E-Mail address is email@example.com. Rosalyn's social security number is
443-63-7289 and her date of birth is January 10, 1965. She is presently a Self-Employed sole owner
of a small retail bookstore (ROSALYN'S
BOOKSTORE) which she has owned and operated since January 6, 2011. Rosalyn's Bookstore is located at 2345
Marshall Lane Houston, Texas 77044-5943, her work telephone number is (713)
434-1275, her fax number is (713) 434-1276 and E-Mail address is firstname.lastname@example.org. The Employer Identification Number for the
bookstore is 76-5678901. The Kellys have
two (2) children who lived with them for the entire year of 2014 and that they
fully supported for the entire year of 2014.
The two (2) children are Jocelyn Danielle Kelly (age 17 (date of birth
November 14, 1997) and social security number 643-28-1863) and Charles Aaron
Kelly (age 10 (date of birth June 16, 2004) and social security number 623-51-2467). In addition, the Kellys provided in 2014 more
than one-half (1/2) of the support of Rosalyn Kelly's mother, Louise Myra
Anderson, (age 74 (date of birth May 29, 1940) at the end of 2014 and social
security number 440-83-6278) and who lived the entire year of 2014 in her own
home located in Livingston, Texas and her only Gross Income for 2014 was
nontaxable Social Security Benefits.
The Kellys, who neither wishes to contribute to the
Presidential Election Campaign Fund, have presented you with the following
information to prepare their 2014 Federal Income Tax Return:
(a) John earned a salary from Houston First
National Bank, Inc. of $71,540 (also Social Security Wages and Medicare
Wages). Federal Income Taxes withheld
from his pay was $7,832, Social Security Taxes (FICA) withheld was $4,435 and
Medicare Taxes withheld was $1,037. John
is covered by a retirement pension plan provided by Houston First National
(b) The Kellys received Interest on Savings Accounts
of $1,200 from Houston First National Bank and Interest of $520 from Harris
County Bonds that they own. In addition,
the Kellys received Cash Dividends of $442 (all "Qualified Dividends")
from Common Stock owned in Bush Corporation.
(c) Rosalyn uses the Cash Method Of Accounting
for Federal Income Tax purposes for her business, ROSALYN'S BOOKSTORE, and the business code for the business
for Federal Income Tax purposes is 451211.
Relevant Financial Information for the business for 2014 is as follows:
Returns And Allowances 2,350
Of Customers 500
(Related To Bookstore Retailers) 400
Inventory January 1, 2014 $28,400
Inventory December 31, 2014 16,800
In 2014 12,900
Inventory is valued at cost. There were
no changes in determining quantities, costs or valuations between Opening and
the above Revenues, Expenses and Expenditures represent cash transactions
occurred during the year of 2014)
Description Cost Date Purchased
Computer And Printer $1,600.00 January 2, 2014
Software 250.00 January 2, 2014
And Fixtures 12,000.00 March 5, 2011
the above assets are used exclusively
at Rosalyn's Bookstore and were
originally placed in service on the date
elected to take the Section 179 Deduction for all assets acquired during the
year of 2014. Assets acquired before 2014
are depreciated using the designated useful life and the Section 179 Deduction
was not elected. (The First Year Additional Depreciation was not
elected for any of these assets).
Rosalyn also drove in 2014 her personal automobile, a 2013
Buick Park Avenue, which she acquired on April 28, 2013, a total of 6,000 miles
(500 miles per month) for business purposes.
Rosalyn has always used the automobile in her business and drove the
automobile a total of 15,000 miles for the entire year of 2014 including 5,200
of commuting miles (Beginning Mileage Reading was 35,000 miles and Ending
Mileage Reading was 50,000 miles). Rosalyn
uses the Standard Mileage Method (Automatic Mileage Method) ($.56 per mile in 2014)
to recover the cost of using her automobile for business purposes. In 2014, Rosalyn also paid $200 for parking
and toll fees while using the automobile for business purposes and paid a total
of $400 of Interest on the loan for the automobile.
(d) The Kellys also own a rent home that they
rent out (Actively Participate) to people unrelated to them. The rent home (not Low-Income Housing) is
located at 825 Lincoln Street Houston, Texas 77048-3252. The Kellys originally began to rent this home
on May 1, 1995 when its depreciable basis was $30,000 (total cost of $37,500
less $7,500 allocated to the Land (Straight-Line Depreciation not
elected)). Relevant information that
pertains to the rent home for 2014 is as follows:
Rental Revenues $5,600
(Real Estate) Taxes 1,020
(All of the above Rental Revenues
and Rental Expenses represent Cash transactions
during the year
In addition to the above, John Kelly
drove in 2014 his personal automobile, a 2011 Chevrolet Caprice, in attending
to the rental property a total of 400 miles (33.33 miles per month). Finally, on June 19, 2014, the Kellys
purchased new appliances (ie. refrigerator, stove and dishwasher) (five-year
property) for the Rental Property for a total purchase price of $1,950.
(e) John attended a Banking Seminar in San
Francisco, California. He incurred
unreimbursed expenses of $1,450 for airfare, lodging and meals ($160 of the $1,450
was for meals).
In addition, John drove in 2014 his
personal automobile a total of 1,200 miles (100 miles per month) for work
related purposes. John purchased the car
on February 3, 2011 and has always used it for work related purposes. He drove the car a total of 12,000 miles in 2014
of which 5,200 were commuting miles (average daily round trip commuting
distance of 20 miles per day) (Beginning Mileage Reading was 50,000 miles and
Ending Mileage Reading was 62,000 miles).
John has always used the Standard Mileage Method (Automatic Mileage
Method) in recovering the cost of using his automobile for work related
(f) The Kellys incurred the following
personal expenses during the year of 2014:
Expenses (Unreimbursed) (Various):
For Themselves And Their Children $4,500
For Rosalyn's Mother
Estate Taxes On Personal Residence
Mortgage Interest On Personal Residence 9,600
On Car Loans 2,400
Contributions - (Cash) (Various Charities) 1,600
Contributions - (Property – Clothing, etc.)
(FMV) 460 ($1,000 ORIGINAL COST)
Hope 1240 North Main Street Houston, Texas 77001-8877)
Preparation Fee 225
(g) The Kellys utilizes the Internal Revenue
Service (IRS) Optional State Sales Tax Table (See page A-14 through page A-15
of the Instructions for Schedule A) to compute their Itemized Deduction for
General Sales Taxes (Their State General Sales Tax Rate is 6.25% and their
Local General Sales Tax Rate is 2.00% for a Total Sales Tax Rate of 8.25%).
(h) The Kellys paid an unrelated
housekeeper/child caretaker, Shelly R. Baker, (address 3785 Pinkston Street
Houston, Texas 77046-2386 and social security number 466-37-3682) and telephone
number (713) 864-3267, $300 per month during the entire year of 2014 to care
for their youngest child at their home while they were at work.
(i) The Kelly's 2013 Federal Income Tax Liability was $12,420.
(j) Rosalyn Kelly made the following Estimated
Tax Payments for the year of 2014:
15, 2014 $2,000
16, 2014 3,100
15, 2014 1,200
15, 2015 2,100
(k) The Kellys will file a Joint Federal
Income Tax Return for the year of 2014.
(l) If the Kellys will receive a refund for
their 2014 Federal Income Tax Return, they would like for the refund to be
Direct Deposited into their bank account as follows:
Name Of Financial Institution: Annette Bank Of Texas
Routing Number: 111000025
Checking Account Number: 0049637821732
on the Tax Return was covered by Health Insurance for the entire year.
NOTE: Visit "www.irs.gov"
(Search in top right hand box for "Tax Tables" then click on "2014 Instruction
1040") for the Tax Table (not
the Tax Rate Schedules) to use to assist in determining the Tax Liability on the Taxable
Income (if preparing Income Tax Return manually).
REQUIRED FORMS AND SCHEDULES
Form 1040 Schedule B
Schedule E Form 2106 Form 4562
Schedule C Schedule
SE Form 2441 Form 8582
The Income Tax Project is due on DECEMBER 5, 2015. (PLEASE REMEMBER TO PUT YOUR NAME ON THE
1. Schedule E total
Depreciation (Line 18): $1,480.80. (Also Line 22 – Form 4562).
2. Schedule E Net Income (Loss) (Line 26): ($644.80).
3. Schedule C Net Income (Line 31): $40,595.20.
4. Schedule A General Sales Taxes Deduction
(Line 5): $1,692.24.
5. Schedule A total Deduction (Line 29): $15,883.95.
6. Adjusted Gross Income (Line 37 and Line
38 (Form 1040)): $110,264.44.
7. Tax Liability On Taxable Income (Line 44
Form 1040): $10,322.30.
8. Form 2441 Credit For Child And Dependent Care Expenses (Line 11):
9. Child Tax Credit (Line 52 (Form 1040): $950.00.
Refund (Line 75 and Line 76a (Form 1040)): $1,723.78.
THERE MAY BE SMALL DIFFERENCES FROM THESE CHECK FIGURES DUE TO