ACCT 542 CSUN Joseph Plummer Tax Return Project

User Generated

whyvnpheyl

Business Finance

ACCT 542

California state university Northridge

ACCT

Description

Pretend you are an IRS Revenue Agent and have been assigned Mr. Plummer’s tax return for
examination (audit). The return contains various entries which you will need to carefully
examine.

The return was filed on 4/15/2015 and contains the following forms and schedules: Form 1040
& Schedules A, B, C & SE. It was prepared by the taxpayer himself on Turbo Tax. Assume it
was filed with the IRS as you see it, even though it contains some missing information. Assume
it was signed by the taxpayer, and had a W-2 attached to it issued by ABC Construction Corp.,
555 South Victoria Ave., Ventura, CA and that the W-2 was for $1,500,000.
Review Form 1040 and each schedule carefully. See if any of the information from one
schedule might relate to another schedule – in other words, given what you see in one
schedule, does that information correspond or conflict with information on another schedule.
What makes this exam different from most of your past exams is that there is no right
and wrong answer. This project requires that you make certain inferences from the information
you are provided and then make some factual assumptions or suppositions about the taxpayer,
his lifestyle, his assets, his business dealings, his sources of income, his expenses, the nature
of his business, the nature of his income, etc.
This project requires you to use your common sense and everyday experiences, as well as your
basic business, accounting and tax knowledge. What I am looking for most is your analysis,
followed by the organization of your answers.

3) Document Request and Background Research (due Feb 24 before class)
c.For each of the 12 deduction items and 5 income items that you have selected for audit, list
in a few sentences list:
i.What documents you are requesting that the taxpayer provide to you
during the audit appointment(s) for each of the items you identified that you
are examining/auditing.
ii.What public records you will review before your interview to be armed
with information so that you know whether the taxpayer or his
representative is being truthful.
iii.What internal IRS reports/transcripts can you review in order to
determine if the taxpayer reported all of his income and to determine the
source of his income in case the source is not clear on the return.
iv.With respect to the 12 deductions, make one or two assumptions of
what the taxpayer might tell you or the documents he might provide that
would make the deduction entirely non-deductible (other than lack of proof
of payment) or partially non-deductible. Tell me what your assumption(s)
is/are and how that would influence the outcome of whether that particular
expense is deductible.
v.With respect to the 5 income items, make one or two assumptions
about what the taxpayer might tell you about the source or nature of the
income. In other words, give me one or two examples of what the taxpayer
might say that may lead you to believe that:
1.there may be other unreported income
2.there may be related persons or entities whose information may
shed more light on this taxpayer and/or his income from other
sources. If so,

a. what information or documents will you ask for relating to such related persons or entities.

b. are there any related party documents you wish to review,
if so please explain in one or two sentences what these
documents might be and what they might reflect about the
taxpayer, his business dealings, etc.


4) The Pre-Audit Phone Call
Assume that you will be using a classic investigative technique – the Surprise Phone Call.
You call the taxpayer at his home or his work. You identify yourself, gently state that his 2014
return has been selected for review, and that you are calling to set up an appointment in the
next few weeks to meet with him at his residence for a few hours. After he recovers from the
initial shock of the news, you ask him if he has few minutes to go over some preliminary matters
before you come out so as to help narrow your audit to no more than what is absolutely
necessary. Assume he agrees to answer your questions.
List fifteen (15) questions you would like to ask in order of importance to pin the facts down
before the taxpayer gets a chance to speak to a representative. Remember, once he hires a
representative, your questions will primarily be answered by the representative.


Good luck and keep in mind the following general directives of the IRS:

The mission of the IRS is to “Provide America's taxpayers top quality service by helping them
understand and meet their tax responsibilities and by applying the tax law with integrity and
fairness to all.” This mission statement describes the IRS’ role and the public’s expectation
about how the IRS should perform that role.
In the United States, the Congress passes tax laws and requires taxpayers to comply.
The taxpayer’s role is to understand and meet his or her tax obligations.
The IRS’ role is to help the large majority of compliant taxpayers with the tax law, while
ensuring that the minority who are unwilling to comply pay their fair share.

How this plays out in the tax audit world is as follows:
1. It is the Revenue Agent’s duty to help achieve the taxpayer’s compliance with the tax laws.
2. The Revenue Agent must be courteous but firm with taxpayers
3. When a tax issue can go either way, the Revenue Agent must protect the interests of the
government.
4. Unless otherwise told to do so, a Revenue Agent must not spend too much time on matters that
will not yield tax dollars for the government.
5. The Revenue Agent must try to close the case in 6 months or less when possible, and if that is
not possible, he/she must articulate to management why additional time is needed.


And these more specific guidelines from the Internal Revenue Manual


Section 4.10.2.3 (08-01-2007) -- In-depth Pre-contact Analysis

1.The examiner is responsible for determining the scope of the audit, beginning with the issues identified by

the classifier on the classification check sheet. The examiner must perform a pre-contact analysis including
a thorough review of the case file to identify large, unusual, or questionable items (LUQs) beyond those
selected on the classification check sheet. The examiner should take the following actions:
A.Review the complete tax return including line items, credits, the balance sheet, elections and
schedules, and any other items attached to the return.
B.[omitted]
C.Review internal and external data from the following sources:
IRP Transcripts,
Asset locator / people locator, and
Internet Research.
D. [omitted]
---------------------------------------
Section 4.10.2.3.1 (08-01-2007) - Large Unusual Questionable Items (LUQs) Defined
1.The definition of a large, unusual, or questionable item will depend on the examiner’s perception of the
return as a whole and the separate items that comprise the return. Some factors to be considered when
identifying LUQs are:
A.Comparative size of the item — an expense item of $6,000.00 with total expenses of $30,000.00
would be a large item; however, if total expenses are $300,000.00, the item would not be generally
considered a large item.
B.Absolute size of the item — despite the comparability factor, size by itself may be significant. For
example, a $50,000 item may be significant even though it represents a small percentage of
taxable income.
C.Inherent character of the item — although the amount of an item may be insignificant, the nature of
the item may be significant; e.g., airplane expenses claimed on a plumber’s Schedule C.
D.Evidence of intent to mislead — this may include missing schedules, incomplete schedules, mis-
classified entries, or obviously incorrect items on the return.
E.Beneficial effect of the manner in which an item is reported — expenses claimed on a business
schedule rather than claimed as an itemized deduction.
F.Relationship to other items — incomplete transactions identified on the tax return. For example, the
taxpayer reported sales of stock but no dividend income.
G.Whipsaw issues — occur when there is a transaction between two parties and characteristics of
the transaction will benefit one party and harm the other. Examples include alimony vs. child
support, sale vs. rental/royalty, employee vs. independent contractor, gift vs. income.
H.[omitted]
I.Missing items — consideration should be given to items which are not shown on the return but
would normally appear on the returns of similar taxpayers. This applies not only to the examination
of income, but also to expenses, deductions, etc., that would result in tax changes favorable to the taxpayer.


Unformatted Attachment Preview

Form 1040 Department of the Treasury ' Internal Revenue Service (99) U.S. Individual Income Tax Return For the year Jan 1 - Dec 31, 2014, or other tax year beginning 2014 , 2014, ending Your first name and initial OMB No. 1545-0074 IRS Use Only , 20 ' Do not write or staple in this space. See separate instructions. Last name Your social security number JOSEPH D PLUMMER 133-50-5453 If a joint return, spouse's first name and initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. Apartment no. 3501 CARIBEH DRIVE City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). ENCINO, CA 91436 Foreign country name Foreign province/state/county Foreign postal code J Make sure the SSN(s) above and on line 6c are correct. Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Filing Status Check only one box. Exemptions 1 2 3 Single 4 Married filing jointly (even if only one had income) Married filing separately. Enter spouse's SSN above & full name here. . G 5 Spouse X Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. .. G Qualifying widow(er) with dependent child 6a X Yourself. If someone can claim you as a dependent, do not check box 6a. . . . . . . . . . . Boxes checked on 6a and 6b. . . No. of children on 6c who: b Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) b if (2) Dependent's (3) Dependent's c Dependents: child under ? lived social security relationship age 17 with you. . . . . . number to you qualifying for child tax cr ? did not Last name (1) First name (see instrs) live with you If more than four dependents, see instructions and check here. . . G JOSEPH PLUMMER II JOSEPHINE PLUMMER 1 2 due to divorce or separation (see instrs). . . . Dependents on 6c not entered above. . Add numbers on lines claimed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . above. . . . . . G 542-12-3232 Son 546-31-3327 Daughter X X d Total number of exemptions 7 Wages, salaries, tips, etc. Attach Form(s) W-2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Income 8 a Taxable interest. Attach Schedule B if required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a b Tax-exempt interest. Do not include on line 8a. . . . . . . . . . . . . . 8b 9 a Ordinary dividends. Attach Schedule B if required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9a Attach Form(s) b Qualified dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9b W-2 here. Also attach Forms 10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . . . . . . . . . . . . . . 10 W-2G and 1099-R 11 Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 if tax was withheld. 12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 If you did not 13 Capital gain or (loss). Att Sch D if reqd. If not reqd, ck here . . . . . . . . . . . . . . . . . . . . . . . . G 13 get a W-2, 14 Other gains or (losses). Attach Form 4797. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 see instructions. 15 a IRA distributions. . . . . . . . . . . . 15 a b Taxable amount. . . . . . . . . . . . . 15 b 16 a Pensions and annuities . . . . . 16 a b Taxable amount. . . . . . . . . . . . . 16 b 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E. 17 18 Farm income or (loss). Attach Schedule F. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 19 Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 a Social security benefits . . . . . . . . . . 20 a b Taxable amount. . . . . . . . . . . . . 20 b 21 Other income 21 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income. . . . . . . . . . . . . G 22 23 Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Adjusted 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ . . . . . . . . . . . . . . . . . . . . 24 Gross 25 Health savings account deduction. Attach Form 8889. . . . . . . . 25 Income 26 Moving expenses. Attach Form 3903 . . . . . . . . . . . . . . . . . . . . . . . 26 27 Deductible part of self-employment tax. Attach Schedule SE. . . . . . . . . . . . . . 27 8,604. 28 Self-employed SEP, SIMPLE, and qualified plans. . . . . . . . . . . 28 29 Self-employed health insurance deduction. . . . . . . . . . . . . . . . . . 29 30 Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . . . 30 31,203. 31 a Alimony paid b Recipient's SSN . . . . G 121-43-4341 31 a 240,000. 32 IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 33 Student loan interest deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 34 Tuition and fees. Attach Form 8917 . . . . . . . . . . . . . . . . . . . . . . . . 34 10,219. 35 Domestic production activities deduction. Attach Form 8903. . . . . . . . . . . . . . 35 36 Add lines 23 through 35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 37 Subtract line 36 from line 22. This is your adjusted gross income. . . . . . . . . . . . . . . . . . . . . G 37 BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. FDIA0112L 12/29/14 3 750,000. 114,217. 303. 191,095. 312,032. 1,367,647. 290,026. 1,077,621. Form 1040 (2014) Form 1040 (2014) Tax and Credits Standard Deduction for ' ? People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. ? All others: Single or Married filing separately, $6,200 Married filing jointly or Qualifying widow(er), $12,400 Head of household, $9,100 Other Taxes Payments If you have a qualifying child, attach Schedule EIC. Refund Direct deposit? See instructions. Amount You Owe Third Party Designee Sign Here Joint return? See instructions. Keep a copy for your records. JOSEPH D PLUMMER 38 Amount from line 37 (adjusted gross income). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 a Check You were born before January 2, 1950, Blind. Total boxes Spouse was born before January 2, 1950, if: Blind. checked G 39 a b If your spouse itemizes on a separate return or you were a dual-status alien, check here . . . . . . . . . G 39 b Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . . . . . . . . . . . . . . . . . . . Subtract line 40 from line 38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exemptions. If line 38 is $152,525 or less, multiply $3,950 by the number on line 6d. Otherwise, see instrs. . . . . . Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Tax (see instrs). Check if any from: a c Form(s) 8814 b Form 4972 . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Alternative minimum tax (see instructions). Attach Form 6251. . . . . . . . . . . . . . . . . . . . . . . . . . 46 Excess advance premium tax credit repayment. Attach Form 8962. . . . . . . . . . . . . . . . . . . . . . 47 Add lines 44, 45 and 46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 48 Foreign tax credit. Attach Form 1116 if required. . . . . . . . . . . . . 48 49 Credit for child and dependent care expenses. Attach Form 2441 . . . . . . . . . . 49 50 Education credits from Form 8863, line 19. . . . . . . . . . . . . . . . . . 50 51 Retirement savings contributions credit. Attach Form 8880. . . 51 52 Child tax credit. Attach Schedule 8812, if required . . . . . . . . . . 52 53 Residential energy credits. Attach Form 5695. . . . . . . . . . . . . . . 53 40 41 42 43 54 Other crs from Form: a 54 3800 b 8801 c 55 Add lines 48 through 54. These are your total credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Subtract line 55 from line 47. If line 55 is more than line 47, enter -0-. . . . . . . . . . . . . . . . . . G 57 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Unreported social security and Medicare tax from Form: a 8919. . . . . . . . . . . . . . . . . . . . . . . 4137 b 59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required. . . . . . . . . . . . . . . . . . . 60 a Household employment taxes from Schedule H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . . . . . . . . . . . . X ........... 61 Health care: individual responsibility (see instructions) Full-year coverage 62 Taxes from: a X Form 8959 b Form 8960 c Instrs; enter code(s) 63 Add lines 56-62. This is your total tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 64 Federal income tax withheld from Forms W-2 and 1099 . . . . . 64 236,250. 65 2014 estimated tax payments and amount applied from 2013 return. . . . . . . . 65 66 a Earned income credit (EIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 a b Nontaxable combat pay election . . . . . G 66 b 67 Additional child tax credit. Attach Schedule 8812. . . . . . . . . . . . 67 68 American opportunity credit from Form 8863, line 8. . . . . . . . . 68 69 Net premium tax credit. Attach Form 8962. . . . . . . . . . . . . . . . . . 69 70 Amount paid with request for extension to file . . . . . . . . . . . . . . 70 71 Excess social security and tier 1 RRTA tax withheld. . . . . . . . . 71 72 Credit for federal tax on fuels. Attach Form 4136. . . . . . . . . . . . 72 73 Credits from Form: a 73 Reserved c Reserved d 2439 b 74 Add lns 64, 65, 66a, & 67-73. These are your total pmts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid . . . . . . . . . . . . . . . 76 a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here. . G G b Routing number . . . . . . . . XXXXXXXXXX G c Type: Checking Savings G d Account number. . . . . . . . XXXXXXXXXXXXXXXXXXXXXXXX 77 Amount of line 75 you want applied to your 2015 estimated tax. . . . . . . . G 77 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions. . . . . . . . . . . . . . . G 79 Estimated tax penalty (see instructions). . . . . . . . . . . . . . . . . . . . 79 Do you want to allow another person to discuss this return with the IRS (see instructions)?. . . . . . . . . . . Designee's name FDIA0112L 12/29/14 Phone no. G 40 41 42 575,325. 502,296. 0. 43 502,296. 44 45 46 47 151,182. 240. 151,422. 55 56 57 58 59 60 a 60 b 61 62 63 151,422. 17,208. 6,538. 175,168. 236,250. 61,082. 61,082. 74 75 76 a 78 X No Yes. Complete below. Personal identification number (PIN) G G 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. Your signature Date Your occupation Daytime phone number A Spouse's signature. If a joint return, both must sign. Print/Type preparer's name Paid Preparer Use Only Page 2 133-50-5453 38 1,077,621. SALESMAN Date Preparer's signature Self-Prepared Firm's name If the IRS sent you an Identity Protection PIN, enter it here (see instrs) Spouse's occupation Date Check if PTIN self-employed G Firm's address G Firm's EIN G Phone no. Form 1040 (2014) SCHEDULE A OMB No. 1545-0074 Itemized Deductions (Form 1040) Department of the Treasury Internal Revenue Service (99) 2014 G Information about Schedule A and its separate instructions is at www.irs.gov/schedulea. G Attach to Form 1040. Attachment Sequence No. Name(s) shown on Form 1040 Your social security number JOSEPH D PLUMMER 133-50-5453 Medical and Dental Expenses Taxes You Paid Interest You Paid Note. Your mortgage interest deduction may be limited (see instructions). Gifts to Charity If you made a gift and got a benefit for it, see instructions. 1 2 3 07 Caution. Do not include expenses reimbursed or paid by others. Medical and dental expenses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Enter amount from Form 1040, line 38. . . . . . 2 Multiply line 2 by 10% (.10). But if either you or your spouse was born before 3 January 2, 1950, multiply line 2 by 7.5% (.075) instead 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 State and local (check only one box): a X Income taxes, or 5 50,250. .............................. b General sales taxes 6 Real estate taxes (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . 6 25,221. 7 Personal property taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Other taxes. List type and amount G 8 9 Add lines 5 through 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Home mtg interest and points reported to you on Form 1098. . . . . . . . . . . . . . . . 11 Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying number, and address G 10 4 0. 9 75,471. 93,212. 11 28,443. 12 12 Points not reported to you on Form 1098. See instrs for spcl rules. . . . . . . . . . . . 13 Mortgage insurance premiums (see instructions) . . . . . . . . . . . . . . 13 14 Investment interest. Attach Form 4952 if required. 14 (See instrs.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Add lines 10 through 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 Gifts by cash or check. If you made any gift of $250 or more, see instrs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,655. 16 17 Other than by cash or check. If any gift of $250 or more, see instructions. You must attach Form 8283 if over $500. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Carryover from prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 19 0. 20 Casualty or theft loss(es). Attach Form 4684. (See instructions.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Job Expenses 21 Unreimbursed employee expenses ' job travel, union dues, job education, etc. Attach Form 2106 or 2106-EZ if and Certain Miscellaneous required. (See instructions.) G Deductions 21 22 Tax preparation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 500. 23 Other expenses ' investment, safe deposit box, etc. List type and amount G 402,138. 19 Add lines 16 through 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Casualty and Theft Losses Other Miscellaneous Deductions Total Itemized Deductions 24 25 26 27 28 23 24 Add lines 21 through 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500. 1,077,621. Enter amount from Form 1040, line 38. . . . . 25 26 Multiply line 25 by 2% (.02) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,552. Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . . . . . . . . . . . . . . . . . . . . . . 27 Other ' from list in instructions. List type and amount G 28 29 Is Form 1040, line 38, over $152,525? Reduction No. Your deduction is not limited. Add the amounts in the far right column -23,939. for lines 4 through 28. Also, enter this amount on Form 1040, line 40. 29 ....................... Yes. Your deduction may be limited. See the Itemized Deductions Worksheet X in the instructions to figure the amount to enter. 30 If you elect to itemize deductions even though they are less than your standard deduction, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G BAA For Paperwork Reduction Act Notice, see Form 1040 instructions. FDIA0301L 12/29/14 0. 0. 575,325. Schedule A (Form 1040) 2014 SCHEDULE B (Form 1040A or 1040) Department of the Treasury Internal Revenue Service (99) 2014 G Attach to Form 1040A or 1040. G Information about Schedule B and its instructions is at www.irs.gov/scheduleb. Name(s) shown on return Attachment Sequence No. 1 133-50-5453 Amount List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address G BANK OF AMERICA CEDAR BANK COMMERCE VALLEY BANK WELLS FARGO (See instructions for Form 1040A, or Form 1040, line 8a.) Note. If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 5. 81,221. 32,932. 59. 1 2 3 Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Subtract line 3 from line 2. Enter the result here and on Form 1040A, or Form 1040, line 8a. . . . . . . . . . . . . . . . . . G Note. If line 4 is over $1,500, you must complete Part III. Part II 08 Your social security number JOSEPH D PLUMMER Part I Interest OMB No. 1545-0074 Interest and Ordinary Dividends 5 2 3 4 114,217. 114,217. Amount List name of payer G AMERICAN GENERAL 303. Ordinary Dividends (See instructions for Form 1040A, or Form 1040, line 9a.) Note. If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. 5 6 Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 1040, line 9a. . . . . . . . . . . . . . . . . . . G Note. If line 6 is over $1,500, you must complete Part III. You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. Part III Foreign Accounts and Trusts (See instructions.) 303. 6 7 a At any time during 2014, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If 'Yes,' are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial Yes No X account is located G 8 During 2014, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If 'Yes,' you may have to file Form 3520. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X BAA For Paperwork Reduction Act Notice, see your tax return instructions. FDIA0401L 11/22/14 Schedule B (Form 1040A or 1040) 2014 Profit or Loss From Business SCHEDULE C (Form 1040) Department of the Treasury Internal Revenue Service OMB No. 1545-0074 (Sole Proprietorship) (99) 2014 G Information about Schedule C and its separate instructions is at www.irs.gov/schedulec. G Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065. Name of proprietor Attachment Sequence No. 09 Social security number (SSN) JOSEPH D PLUMMER 133-50-5453 A Principal business or profession, including product or service (see instructions) C Business name. If no separate business name, leave blank. E Business address (including suite or room no.) B Enter code from instructions G 999999 D Employer ID number (EIN), (see instrs) CONTRACTOR/CONSULTANT JD PLUMMER SONSULTING G23679 CALABASAS ROAD SUITE 510 City, town or post office, state, and ZIP code (1) X Cash (2) Accrual (3) Other (specify) G F Accounting method: G Did you 'materially participate' in the operation of this business during 2014? If 'No,' see instructions for limit on losses . H If you started or acquired this business during 2014, check here. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G I J X Yes No Did you make any payments in 2014 that would require you to file Form(s) 1099? (see instructions). . . . . . . . . . . . . . . . . . . . . Yes X No If 'Yes,' did you or will you file required Forms 1099?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No Part I 1 2 3 4 5 6 7 Income Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on Form W-2 and the 'Statutory employee' box on that form was checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . G Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtract line 2 from line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold (from line 42). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G 1 2 3 4 5 6 7 500,000. 500,000. 500,000. 500,000. Part II Expenses. Enter expenses for business use of your home only on line 30. 8 9 10 11 12 13 14 Advertising . . . . . . . . . . . . . . . . . . . . Car and truck expenses (see instructions) . . . . . . . . . . . . . . Commissions and fees . . . . . . . . . Contract labor (see instructions) . . . . . . . . . . . . . . Depletion. . . . . . . . . . . . . . . . . . . . . . Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . . . . . . . . . . . . . Employee benefit programs (other than on line 19) . . . . . . . . . 8 9 10 35,332. 25,000. 11 12 62,400. 13 18 Office expense (see instructions). . . . . . . . 19 Pension and profit-sharing plans . . . . . . . . 20 Rent or lease (see instructions): a Vehicles, machinery, and equipment. . . . . b Other business property . . . . . . . . . . . . . . . . 21 22 23 24 Repairs and maintenance. . . . . . . . . . . . . . . Supplies (not included in Part III). . . . . . . . Taxes and licenses. . . . . . . . . . . . . . . . . . . . . Travel, meals, and entertainment: a Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 a 20 b 21 22 23 24,000. 24 a 30,309. 24 b 25 26 27 a 27 b 28 29 32,383. 5,399. 1,532. 308,905. 191,095. 30 Net profit or (loss). Subtract line 30 from line 29. ? If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. ? If a loss, you must go to line 32. 32 12,221. 14 b Deductible meals and entertainment (see instructions). . . . . . . . . . . . . . . . . . . . . . . 15 Insurance (other than health) . . . 15 21,342. 16 Interest: 25 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a Mortgage (paid to banks, etc). . . . . . . . . 16 a 26 Wages (less employment credits). . . . . . . . b Other . . . . . . . . . . . . . . . . . . . . . . . . . 16 b 27 a Other expenses (from line 48). . . . . . . . . . . 17 Legal & professional services. . . 17 b Reserved for future use . . . . . . . . . . . . . . . . 58,987. 28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . . . . . . . . . . . . . . . . . . . . . G 29 Tentative profit or (loss). Subtract line 28 from line 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home: and (b) the part of your home used for business: . Use the Simplified Method Worksheet in the instructions to figure the amount to enter on line 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 18 19 31 191,095. If you have a loss, check the box that describes your investment in this activity (see instructions). ? If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. ? If you checked 32b, you must attach Form 6198. Your loss may be limited. BAA For Paperwork Reduction Act Notice, see the separate instructions. FDIZ0112L 10/30/14 All investment is at risk. Some investment 32 b is not at risk. Schedule C (Form 1040) 2014 32 a OMB No. 1545-0177 Form 4684 Casualties and Thefts Department of the Treasury Internal Revenue Service A Information about Form 4684 and its separate instructions is at www.irs.gov/form4684. A Attach to your tax return. A Use a separate Form 4684 for each casualty or theft. 2014 Attachment Sequence No. Identifying number Name(s) shown on tax return 26 JOSEPH D PLUMMER 133-50-5453 SECTION A ' Personal Use Property (Use this section to report casualties and thefts of property not used in a trade or business or for income-producing purposes.) 1 Description of properties (show type, location, and date acquired for each property). Use a separate line for each property lost or damaged from the same casualty or theft. Property Property Property Property A B C D Jewlery 1/01/2014 Properties A 2 3 Cost or other basis of each property . . . Insurance or other reimbursement (whether or not you filed a claim) (see instructions) . . . . . . . . . . . . . . . . . . . . . 2 B C D 510,000. 3 Note: If line 2 is more than line 3, skip line 4. 4 5 6 7 8 9 10 11 12 Gain from casualty or theft. If line 3 is more than line 2, enter the difference here and skip lines 5 through 9 for that column. See instructions if line 3 includes insurance or other reimbursement you did not claim, or you received payment for your loss in a later tax year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair market value before casualty or theft. . . . . . . Fair market value after casualty or theft . . . . . . . . Subtract line 6 from line 5. . . . . . . . . . . . . Enter the smaller of line 2 or line 7 . . . . 4 5 6 7 8 9 750,000. 0. 750,000. 510,000. 510,000. Subtract ln 3 from ln 8. If zero or less, enter -0-. . Casualty or theft loss. Add the amounts on line 9 in columns A through D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter the smaller of line 10 or $100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 12 510,000. 100. 509,900. Add the amounts on line 12 of all Forms 4684 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add the amounts on line 4 of all Forms 4684 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 509,900. ? If line 14 is more than line 13, enter the difference here and on Schedule D. Do not complete the rest of this section (see instructions). ................ 15 0. 16 If line 14 is less than line 13, enter the difference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 509,900. 17 Enter 10% of your adjusted gross income from Form 1040, line 38, or Form 1040NR, line 37. Estates and trusts, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 107,762. 13 14 15 Subtract line 11 from line 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Caution: Use only one Form 4684 for lines 13 through 18. ? If line 14 is less than line 13, enter -0- here and go to line 16. ? If line 14 is equal to line 13, enter -0- here. Do not complete the rest of this section. 18 Subtract line 17 from line 16. If zero or less, enter -0-. Also enter the result on Schedule A (Form 1040), line 20, or Form 1040NR, Schedule A, line 6. Estates and trusts, enter the result on the 'Other deductions' line of your tax return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 BAA For Paperwork Reduction Act Notice, see instructions. FDIZ0901L 06/25/14 402,138. Form 4684 (2014) Form OMB No. 1545-0074 6251 Department of the Treasury Internal Revenue Service (99) Alternative Minimum Tax ' Individuals 2014 G Information about Form 6251 and its separate instructions is at www.irs.gov/form6251. G Attach to Form 1040 or Form 1040NR. Name(s) shown on Form 1040 or Form 1040NR Attachment Sequence No. 32 Your social security number JOSEPH D PLUMMER 133-50-5453 Part I Alternative Minimum Taxable Income (See instructions for how to complete each line.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 If filing Schedule A (Form 1040), enter the amount from Form 1040, line 41, and go to line 2. Otherwise, enter the amount from Form 1040, line 38, and go to line 7. (If less than zero, enter as a negative amount.). Medical and dental. If you or your spouse was 65 or older, enter the smaller of Schedule A (Form 1040), line 4, or 2.5% (.025) of Form 1040, line 38. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes from Schedule A (Form 1040), line 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter the home mortgage interest adjustment, if any, from line 6 of the worksheet in the instructions for this line. . . . . . . . . . . . . . . . . . . . Miscellaneous deductions from Schedule A (Form 1040), line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If Form 1040, line 38, is $152,525 or less, enter -0-. Otherwise, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax refund from Form 1040, line 10 or line 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment interest expense (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depletion (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net operating loss deduction from Form 1040, line 21. Enter as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . Alternative tax net operating loss deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest from specified private activity bonds exempt from the regular tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Qualified small business stock (7% of gain excluded under section 1202). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercise of incentive stock options (excess of AMT income over regular tax income) . . . . . . . . . . . . . . . . . . . . . . . Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Electing large partnerships (amount from Schedule K-1 (Form 1065-B), box 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposition of property (difference between AMT and regular tax gain or loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation on assets placed in service after 1986 (difference between regular tax and AMT) . . . . . . . . . . . . . . Passive activities (difference between AMT and regular tax income or loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss limitations (difference between AMT and regular tax income or loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Circulation costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term contracts (difference between AMT and regular tax income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mining costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and experimental costs (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income from certain installment sales before January 1, 1987. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible drilling costs preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other adjustments, including income-based related adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternative minimum taxable income. Combine lines 1 through 27. (If married filing separately and line 28 is more than $242,450, see instructions.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II 1 502,296. 2 3 75,471. 4 5 6 -23,939. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 553,828. Alternative Minimum Tax (AMT) 29 Exemption. (If you were under age 24 at the end of 2014, see instructions.) IF your filing status is. . . . AND line 28 is not over. . . THEN enter on line 29 . . . . Single or head of household . . . . . . . . . . . . . . . $117,300 . . . . . . . . . . . . . . . . $52,800 ...... 82,100 Married filing jointly or qualifying widow(er) 156,500 . . . . . . . . . . . . . . . . 41,050 Married filing separately. . . . . . . . . . . . . . . . . . . 78,250 . . . . . . . . . . . . . . . . If line 28 is over the amount shown above for your filing status, see instructions. 30 Subtract line 29 from line 28. If more than zero, go to line 31. If zero or less, enter -0- here and on lines 31, 33, and 35, and go to line 34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 ? If you are filing Form 2555 or 2555-EZ, see instructions for the amount to enter. ? If you reported capital gain distributions directly on Form 1040, line 13; you reported qualified dividends on Form 1040, line 9b; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040) (as refigured for the AMT, if necessary), complete Part III on page 2 and enter the amount from line 64 here. ....... ? All others: If line 30 is $182,500 or less ($91,250 or less if married filing separately), multiply line 30 by 26% (.26). Otherwise, multiply line 30 by 28% (.28) and subtract $3,650 ($1,825 if married filing separately) from the result. 30 553,828. 31 151,422. 32 Alternative minimum tax foreign tax credit (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 33 Tentative minimum tax. Subtract line 32 from line 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 151,422. 34 Add Form 1040, line 44 (minus any tax from Form 4972), and Form 1040, line 46. Subtract from the result any foreign tax credit from Form 1040, line 48. If you used Schedule J to figure your tax on Form 1040, line 44, refigure that tax without using Schedule J before completing this line (see instructions). . . . . . . . . . . . . 34 151,182. 35 AMT. Subtract line 34 from line 33. If zero or less, enter -0-. Enter here and on Form 1040, line 45 . . . . . . . . . FDIA5312L 12/3/14 BAA For Paperwork Reduction Act Notice, see your tax return instructions. 29 35 240. Form 6251 (2014) Form 8959 Department of the Treasury Internal Revenue Service OMB No. 1545-0074 Additional Medicare Tax G If any line does not apply to you, leave it blank. See separate instructions. G Attach to Form 1040, 1040NR, 1040-PR, or 1040-SS. G Information about Form 8959 and its instructions is at www.irs.gov/form8959. 2014 Attachment Sequence No. 71 Name(s) shown on return Your social security number JOSEPH D PLUMMER Part I Additional Medicare Tax on Medicare Wages 133-50-5453 2 Medicare wages and tips from Form W-2, box 5. If you have more than one Form W-2, enter the total of the amounts from box 5 . . . Unreported tips from Form 4137, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 5 Wages from Form 8919, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add lines 1 through 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter the following amount for your filing status: 6 Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000 200,000. 5 Single, Head of household, or Qualifying widow(er). . . . $200,000 Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 550,000. Additional Medicare Tax on Medicare wages. Multiply line 6 by 0.9% (.009). Enter here and go to Part II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4,950. 1 7 Part II 1 750,000. 2 3 4 750,000. Additional Medicare Tax on Self-Employment Income 8 Self-employment income from Schedule SE (Form 1040), Section A, line 4, or Section B, line 6. If you had a loss, enter -0- (Form 1040-PR and Form 1040-SS filers, see instructions.). . . . . . . . . . . . . 9 Enter the following amount for your filing status: Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Single, Head of household, or Qualifying widow(er). . . . 8 176,476. 9 200,000. 750,000. 0. $250,000 $125,000 $200,000 10 Enter the amount from line 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Subtract line 10 from line 9. If zero or less, enter -0- . . . . . . . . . . . . Subtract line 11 from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 176,476. 13 Additional Medicare Tax on self-employment income. Multiply line 12 by 0.9% (.009). Enter here and go to Part III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1,588. Part III 10 11 Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation 14 Railroad retirement (RRTA) compensation and tips from Form(s) W-2, box 14 (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Enter the following amount for your filing status: 16 Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000 15 Single, Head of household, or Qualifying widow(er). . . . $200,000 Subtract line 15 from line 14. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional Medicare Tax on railroad retirement (RRTA) compensation. Multiply line 16 by 0.9% (.009). Enter here and go to Part IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Part IV 18 14 $250,000 17 Total Additional Medicare Tax Add lines 7, 13, and 17. Also include this amount on Form 1040, line 62, (Form 1040NR, 1040-PR, and 1040-SS filers, see instructions) and go to Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part V 16 18 6,538. 4,950. Withholding Reconciliation 19 Medicare tax withheld from Form W-2, box 6. If you have more than one Form W-2, enter the total of the amounts from box 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 Enter the amount from line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 15,825. 750,000. 21 Multiply line 20 by 1.45% (.0145). This is your regular Medicare tax withholding on Medicare wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 10,875. 22 Subtract line 21 from line 19. If zero or less, enter -0-. This is your Additional Medicare Tax withholding on Medicare wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 23 Additional Medicare Tax withholding on railroad retirement (RRTA) compensation from Form W-2, box 14 (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Total Additional Medicare Tax withholding. Add lines 22 and 23. Also include this amount with federal income tax withholding on Form 1040, line 64 (Form 1040NR, 1040-PR, and 1040-SS filers, see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 BAA For Paperwork Reduction Act Notice, see your tax return instructions. FDIA6301 10/16/14 4,950. Form 8959 (2014) Tax Return Project Julia Solovey CSUN ACCT 542 April 6, 2022 1. Pre-Audit Analysis • Overpaid The amount that should be refunded is indicated as $61,082 because it is considered as an overpayment. However, the figure seems excessively large considering that Plummer has multiple sources of income including from self-employment and as an employee. Thus, Mr. Plummer earns both from his salary and profits from his business, all of which improve his living standards. • Early Withdrawal The penalty for early withdrawal of savings is recorded as $31,203, which is a huge amount to be charged in such circumstances. Given the extent of this amount, it can be concluded that Mr. Plummer urgently needed money or had few assets. The amount reduces the amount of taxes paid by Plummer. • Dividends The $303 paid as dividend seems excessively small when compared to other sources of income. This figure indicates that Plummer’s investment is not lucrative because it yields a small tax return. • Taxable Interest The taxable interest is recorded as $114,217, which is a large figure. It means that Mr. Plummer had a large disposable income, allowing him accumulate huge savings, resulting in a higher taxable interest. • Alimony The amount of money paid as alimony is indicated as $240,000, which represents a large portion of Mr. Plummer’s income. This figure shows that Mr. Plummer has high standards of living and would therefore pay a huge alimony for his wife to maintain the same standards. • Child Tax While Mr. Plummer has indicated as having two children, the amount of child tax has been omitted from the records. In this case, Mr. Plummer does not seek to reduce his tax liability and therefore pays the additional tax return, revealing that he earns a huge income and does not require government support. • Salary Taxed The salary taxed is $750,000, which is a large amount, indicating that Mr. Plummer earns a huge income and enjoys high living standards. • Itemized Deductions The $575,325 included as itemized deductions is a huge sum of money, which reduces the taxable income. It indicates that Mr. Plummer earns a huge income, which explains the high amount of itemized deductions. • Federal Income Tax Withheld Mr. Plummer’s federal income tax withheld is $236,250, which a large amount, indicating that he has a high paying job, which brings a huge income. • Individual Retirement Account Distributions The $312,032 indicated as individual retirement account is a fairly large amount. Thus, Plummer must have withdrawn a large amount of money. It indicates that he may have been low on assets or paid a low income. It increases the amount of tax returns. 2. Audit Plan a. Deductions to Audit 1. Deductible part of self-employment tax The deductable part of self-employment tax is extremely high. 2. Penalty on early withdrawal In this case, the audit would reveal whether the amount withdrawn aligns with the penalty. 3. Alimony paid Plummer paid a huge amount in alimony, which should be investigated to eliminate suspicion. 4. Tuition and fees It is stated that tuition and fees deductions should only be allowed for up to $4,000. However, the item indicates $10,219, which is higher than the required minimum. 5. Casualty or theft The $420,138 indicated as casualty or theft is unreasonably high. 6. Contract labor It is essential to investigate and ascertain the amount of wage paid to each employee under the contract labor to identify any excess amounts. 7. Legal & professional services The records show a large amount paid as legal and professional services, which may be exaggerated. 8. Child tax credit Child credit may be omitted from the list of deductions considering that Mr. Plummer has included that he has children who qualify for child tax credit. 9. Home mortgage interest The amount of home mortgage interest needs to be audited because $93,212 is a huge amount. 10. State and local income taxes The state and local income taxes amounting $50,250 seem unreasonable and may be included to evade paying more taxes. • Travel, meals, and entertainment The amount deducted in this category may have exceeded the standard cost for travel, meals, and entertainment. Nevertheless, $32,383 seems like a lot of money to cover these expenses. • Car and truck expenses The expenses increase the amount of deductions, thereby reducing the amount of taxes. This figure may be overestimated because some of the trips may have been non-business trips. b. Five Items to Question during an Interview • Dividends The small amount of dividends paid insinuate a deteriorating or non-lucrative investment. • Business income The amount indicated as business income is very low, showing that the company may have overestimated the expenses or reduced the gross income from the business. • Taxable interest This item is selected because the indicated amount is huge, showing that the tax payer may have other sources of income to afford such high return savings. • Wages, salaries, and tips The amount included in this section is somewhat low compared to other incomes, which may indicate underreporting. • IRA distributions The indicated figure seems large and should be audited to determine if it is overestimated.
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TAX PROJECT PART 3 & 4

1

Joseph Plummer Tax Return Project part 3 and 4

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TAX PROJECT PART 3 & 4

2

Joseph Plummer Tax Return Project part 3 and 4
3) Document Request and Background Research
12 Deductions
Deductable part of self employment tax
In this case, I would request for schedule E and his pay slip to ascertain his claims. I would
review schedule E to understand the guidelines of accounting for deductable income tax. The tax
payer may provide invoices of office supply expenses, internet and phone bills, and their
vehicle’s mileage to show why the deduction figure was high. If vehicle expenses were incurred
during work activities, the deductions would be justified.
Penalty on early withdrawal
I would request the tax payer to provide bank receipts showing the amount deposited in their
account from the retirement plan and other receipts showing where they spend the funds. The tax
payer may provide receipts showing that they withdrew the money to cover medical insurance.
In this case, Plummer would be exempted from the 10 percent additional tax penalty on earl
withdrawal.
Alimony paid
I would require divorce documents and bank receipts or a photocopy of bank statements. The tax
payer may provide divorce papers indicating the date of divorce, which would prove that they
separated and that alimony was payable on a particular date. In addition, the provision of bank
receipts would confor...


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