(2nd project)ACCT3410 – Fall 2015 Required Tax Return #1

ACCT3410 – Fall 2015 Required Tax Return #1

“Here is a little ditty about Jack and Diane”

Directions: Please complete the required federal individual income tax return forms for Jack and Diane Diddie for the 2015 tax year. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. If a 2015 form is unavailable, you may use the 2014 form but utilize all rules, thresholds, rates, percentages, etc. that are applicable to 2015 (i.e. – you must update the form where needed). You are not required to complete the state individual income tax forms. The completed return must be submitted with a tax correspondence letter to the client addressing the return, major items, etc. All Tax Return(s) are to be done individually by each student. Students may not seek nor provide any assistance to other students in completion of these returns. In addition, students may not receive assistance from outside parties (example – mommy is a tax CPA). You may utilize the book, tax code, internet, divine intervention, but you are not allowed to work with fellow students or outside parties (mom, dad, uncle cpa, etc.). The back page of every document you turn must have the following statement HANDWRITTEN, SIGNED and DATED.

I affirm under penalty of perjury and pursuant to the ETSU Honor Code, I have not received nor given any assistance to another student for this project. In addition, I affirm I have not received any assistance from outside parties or providers. Furthermore, I have not witnessed nor suspected another student of academic misconduct for this project. Last but not least, I have not discussed this project with other students or outside parties AND have not been approached to discuss this project by another student or outside parties. Printed Name: ______________________ Signature: _____________________ Date: ______

Facts: Jack (age 43) and Diane Diddie (age 43) are married and live in Lexington, Kentucky. The Diddies have two children Tito, age 15, and LaToya, age 12. The Diddies would like to file a joint tax return for the year. The following information relates to the Diddies’ tax year:

• Jack’s Social Security number is 987-45-1234 • Diane’s Social Security number is 494-37-4893 • Tito’s Social Security number is 412-32-5690 • LaToya’s Social Security number is 412-32-6940 • The Diddies’ mailing address is 95 Hickory Road, Lexington, Kentucky 40502. • Tito and LaToya are tax dependents for federal tax purposes

Jack Diddie received the following during the year:

Employer Gross Wages Federal Income Tax Withholding

State Income Tax Withholding

National Storage $66,200 $8,000 $3,750 Lexington Little League $2,710 0 0 Diane Diddie received the following during the year:

Employer Gross Wages Federal Income Tax Withholding

State Income Tax Withholding

Jensen Photography $24,500 $2,450 $1,225

ACCT3410 – Fall 2015 Required Tax Return #1

“Here is a little ditty about Jack and Diane”

All applicable and appropriate payroll taxes were withheld by Diddies’ respective employers. The Diddies also received the following during the year:

Interest income from First Kentucky Bank $130 Interest income from City of Lexington, KY Bond $450 Interest income from U.S. Treasury Bond $675 Interest income from Nevada State School Board Bond $150 Workers’ compensation payments to Jack $4,350 Disability payments received by Jack on account of injury $3,500

• National Storage paid 100% of the premiums on the policy and included the premium payments in Jack’s taxable wages

Receipt of payment by Diane as a result of a lawsuit for damages sustained in a car accident: • Medical Expenses $2,500 • Emotional Distress $12,000 • Punitive Damages $10,000

Total $24,500 Eight years ago, Diane purchased an annuity contract for $88,000. She received her first annuity payment on January 1, 2015. The annuity will pay Diane $15,000 per year for ten years (beginning with this year). The $15,000 payment was reported to Diane on Form 1099-R for the current year (box 7 contained an entry of “7” on the form). The Diddies did not own, control or manage any foreign bank accounts nor were they a grantor or beneficiary of a foreign trust during the tax year. The Diddies paid or incurred the following expenses during the year:

Dentist/Orthodontist (unreimbursed by insurance) $10,500 Doctors (unreimbursed by insurance) $ 625 Prescriptions (unreimbursed by insurance) $ 380 KY state tax payment made on 4/15/15 for 2014 liability $ 1,350 Real property taxes on residence $ 1,800 Vehicle registration fee based upon age of vehicle $ 250 Mortgage interest on principal residence $ 8,560 Interest paid on borrowed money to purchase the City of

Lexington, KY municipal bonds $ 400 Interest paid on borrowed money to purchase

U.S. Treasury bonds $ 240 Contribution to the Red Cross $ 1,000 Contribution to Senator Rick Hartley’s Re-election Campaign $ 2,500 Contribution to First Baptist Church of Kentucky $ 6,000 Fee paid to Jones & Company, CPAs for tax preparation $ 200

In addition, Jack drove 6,750 miles commuting to work and Diane drove 8,230 miles commuting to work. The Diddies have represented to you that they maintained careful logs to support their respective mileage. The Diddies drove 465 miles in total to receive medical treatment at a hospital in April.

ACCT3410 – Fall 2015 Required Tax Return #1

“Here is a little ditty about Jack and Diane”

During the year, the Diddies’ personal residence was burglarized on October 1. The theft occurred during the day while the Diddies were at work and their children were at school. The Diddies had the following personal property stolen:

Item Purchase Date Fair Value on Date of Theft

Tax Basis of Item Insurance Reimbursement

Laptop computer and Printer

09/01/2015 3,000 3,000 500

Rifle 03/01/2013 2,000 2,500 500 TV/Projector 03/01/2013 5,000 13,000 1,000

2006 Honda Pilot 07/01/2014 4,000 6,500 500 Total 14,000 25,000 2,500

The Diddies want to contribute to the Presidential Election Campaign. The Diddies would like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund is by check.