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ACC 401 The Final Paper on Tax Return Paper Assignment (2)

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The Final Paper on Tax Return Paper Assignment
ACC 401: Federal Income Taxes I
I used Form 1040 because Appendix A called for a Married filing jointly
return, with credits and Itemized Deductions. This return was a tad tricky
until I realized that the W2 information required me to utilized Box 12 for
the IRA (k) contribution (payroll deductions) and Box 14 for the
Healthcare costs (payroll deductions). Also; tricky situation occurred that
I am not accustomed to. I needed to add to Box 14 for the SDI
(mandatory disability insurance). It appears that California requires this
deduction. Living and filing out my own income taxes forms in Utah, I
never had to work with a mandatory SDI deduction before. Once I
figured out the income from the W-2’s ($90,916.00 from line 7, on form
1040), I then needed to figure out the income from the sales of their
home.
I should have received a Form 1099-S from the sale of the primary
residence. I then proceeded to figure out the gain on the sale of the
home and ascertain if it should be taxed. According to the IRS:
Gain:
1. If you have a gain from the sale of your main home, you may be able
to exclude up to $250,000 of the gain from your income ($500,000 on a
joint return in most cases).
2. If you can exclude all of the gain, you do not need to report the sale
on your tax return.
3. If you have gain that cannot be excluded, it is taxable. Report it on
Schedule D (Form 1040) (IRS.gov, 2010).
So, the first thing I had to do was figure out the gain of the sale of the
home (if any). I utilized the following calculations:
Adjusted basis of the home | $520,000 |

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