Karl A. and Carrie A. are married with a 23 year old daughter Kim who is a college student who lives at home. They provide her full support.
Carrie is a CPA and sole proprietor for the CPA work she does throughout the year.
Carrie earned $100,000 providing CPA services throughout the year and had the following expenses ( using the cash basis method of accounting):
Advertising $1,500
Office Supplies $3,000
In addition to the $100,000 , Carrie provided year-end tax planning CPA services to Chris Smith for $2,500 and told him to make the check payable to her daughter as her daughter needed to buy books for school. Carrie received the check on 12/31 and it was dated for 12/28 but Kim did nt cash the check until January 3rd of the following year. ( do not worry about calculating self-employment tax) the deduction for ½ the tax is 6,924 on Line 27.
Carrie gave a loan to her nephew Zach, on 1/1/15 for $1,000 with no interest so he could pay for his school books. The AFR rate for the full tax year was 3%. Zach had $200 of net investment income for the year
Unfortunately, Carries aunt Christine passed away during the year. Christine left her the following in her will :
Cash of $10,000
Personal car that Christine had purchased 2/1/12 for $25,000 and currently has FMV of 10,000
Carrie sold the car she inherited on 7/15/15 for $11,000
Carrie invested in the $10,000 she inherited along with her existing savings and earned the following during the year in her HSBC account. The following was reported on her 1099 from HSBC:
Interest income - $200
Tax exempt NJ muni bonds $500
Sale of 100 shares google stock ( bought 3/1/14 - $5,000 and sold 9/2/15 - $15,000)
Sale of 50 shares Toys R us stock (bought 12/1/14 - $20,000 and sold 8/1/15 $2,000)
Carrie also held stock that she bough on 3/1/13 which she didn’t sell, in Apple, which appreciated in value at the end of the year by $5,000
Karl and carrie paid total real estate taxes during the year of $15,000, state income taxes of $10,000 and mortgage interest of $9,000
Karl received a Schedule K-1 from a partnership he is invested in
Assignment ::
1. Prepare Karl and Carries Form 1040 tax return with the given information (2015 tax year form) up to Line 43 “Taxable income” only and all necessary schedules and forms -- all can be found on irs.gov
Do not calculate tax liabilitiy
2. For any items not reflected on the return, explain why
If forms can not be fully completed or uploaded, a list of what form is needed for each piece of information and what line to put it on would help greatly.