Income Tax Return
Tax Return Problem
Due at beginning of class –
Nov. 29, 2017
(Forms available at: http://www.irs.gov/formspubs/ )
Directions: Prepare 2017 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 $6,000 in child care expenses for Barron while she worked.
Salary: Donald - $35,000, Melania – $30,000
Interest from Mellon Bank - $3,000, Interest on New York municipal bonds - $2,600
Dividends on Trump, Inc. stock – 6,000
Sold 1,000 shares of IBM stock for $8,000 on January 15, 2017. Shares were purchased on January 15, 2001 for $3,000.
Melania had the following operating results from her modeling business, which she operated as a sole proprietorship:
Sales income - $12,000
Office supplies - 4,000
Advertising Expenses - 1,000
Business clothing – 3,000
Donald and Melania rented out the old family home in New York for the entire year:
Rental income - $14,000, Mortgage interest - $7,000
Depreciation - The house was purchased in 12/01/15 at a cost of $100,000 and is depreciated on a straight line basis over 27.5 years. Accumulated Depreciation from prior years was $3,787.
Mortgage interest on the white house owned by Donald and lived in by family - $5,000
Real Estate taxes on the white house - $4,000;
State income taxes withheld from Donald’s wages - $2,000
Federal income taxes withheld from Donald’s wages - $6,000
New York City sales tax paid by Donald was $2,800.
State income tax refund of 2016 overpayment received in 2017 - $4,000 (2016 state income taxes were fully deductible on the 2016 tax return.)
Donald had $9,000 of business travel expenses, which were reimbursed by his employer.
Melania paid $6,000 in college tuition for graduate school and $500 for eyeglasses.
Donald contributed $3,000 to the United Way, and $2,000 to Fordham University during the year.
Michelle 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.
2. Use 2016 IRS tax return forms where 2017 forms are not yet available.
Extra Credit – To potentially assist in improving one’s grade to a “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, 2017. Shares were received as a gift from mother, Mary Ann, on January 15, 2013. Mary Ann purchased stock on January 1, 1999 for $9,000. The value of the stock on January 15, 2013 was $6,000.
Donald received $23,000 in social security benefits during the year.
Donald paid $4,000 in alimony and $8,000 in child support to his first wife, Ivanka.
Melania’s law business purchased the following assets in 2017:
7 year equipment - $2,000 on July 31
5 year equipments - $1,000 on May 31
(Please maximize her 2017 depreciation deduction.)
Melania’s earrings were stolen on July 12. She purchased the earrings 4 years earlier for 7,000. At time of robbery, the earrings were valued at $8,000.
Unreimbursed medical expenses
· Dr. appointments for Donald and Melania - $6,000
· Dr. appointments for Barron - $5,000
· Prescription drugs - $2,000
· Melania’s eye glasses - $500
· Medical insurance premiums - $1,500
Donald and Melania also have a twenty year old daughter, Hilary. Hilary is a full-time graduate student and Donald paid $13,000 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 $2,500 in union dues related to his employment.
Melania paid $2,400 for professional licenses.
Donald and Melania like to eat out and spent $5,000 at various restaurants in the D.C. area.