Advanced Tax Concepts.
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20160523210207wgu_c239_task_one___two.zip20160523201202task_2_file_two (1).pdf
Jason and Judith Zollinger QuickBooks data: Jason and Judith Zollinger II Income and Expenses Maximize Deductions Jason Zollinger SS#: 543-21-0987 DOB: 06/27/1959 Self-Employed, Artist Sole Proprietorship: Jason Zollinger Artist Judith Zollinger SS# 543-21-0986 DOB: 09/18/1962 Accountant TJ and Associates (S Corporation) W2 – Wages: $63,500 Medical: $13,500 (Use the K1 from TJ & Associates generated in Task 1 for Mrs. Zollinger) Dependents: Johnny Zollinger DOB: 02/04/2003 SS#: 234-56-7890 Janey Zollinger DOB: 07/01/1995 SS#: 345-67-8901 Student: Sunshine College – freshman full time Sunshine College EIN: 57-1234567 Janey has not been convicted of any crimes. Jeremy Zollinger DOB: 09/30/2010 SS#: 456-78-9012 Child Care: The couple’s daycare expenses were paid to Ms. Sunshine Florida, Balmy Drive, Sunshine, FL 33040, SSN# 541-77-7777. Half of the daycare bill was for Johnny and half for Jeremy. Rental House: 3456 Abbey Road, Sunshine, FL Purchased 11/30/1998 $200,000 (land basis $20,000) 1,300 square feet Lived in the home until 02/15/2011 Rental period: 1/1/2013 – 12/31/2013 Primary Residence: Purchased 02/15/2011 $325,000 (land basis $80,000) 2,800 square feet Primary Residence Address: 1234 Main Street, Sunshine, FL 33040
Home office: 256 square feet used exclusively by Jason Zollinger. The home’s major rooms are the studio, 5 bedrooms, a living room, a garage, a kitchen, a library, and a sun room. Jason began using the studio in his work as soon as the Zollingers purchased the house. Choose either the simplified method or actual expense method to maximize deductions. Charitable Contributions: The charitable contributions in the attached printout were made by check to the Red Cross and are separate from any amounts given by Mrs. Zollinger’s business. . Purchased 900 shares of E stock on 7/31/2009 @ $30 per share Sold 500 shares of E Stock on 4/15/2013 @ 45 per share Long-Term Capital Loss Carryover from 2012: $36,000 Dividend income: all qualified dividends The taxpayer and spouse wish to designate a contribution to the presidential election campaign fund. Use tax methods that minimize taxable income. All estimated tax payments were made by the appropriate deadlines and were equal in amount.
8:24 PM 10/26/14 Cash Basis
Jason and Judith Zollinger II Profit & Loss
January through December 2013
Page 1 of 2
Jan - Dec 13
Ordinary Income/Expense
Income
Art Sales 98,000.00
Dividend Income
ABC Corporation 1,625.00
E Stock 1,350.00
XYZ Corporation 122.00
Total Dividend Income 3,097.00
Gain (loss) on Investment 7,500.00
Rental 3456 Abbey Road 14,400.00
Salaries and Wages
Judith Zollinger 63,500.00
Judith Zollinger (Health Ins) 13,500.00
Total Salaries and Wages 77,000.00
Total Income 199,997.00
Expense
Charitable Contributions 6,000.00
Child Care 3,000.00
Continuing Education
Judith Zollinger 1,000.00
Total Continuing Education 1,000.00
Health Insurance (TJ and Assoc) 13,500.00
Insurance Expense
Life and Disability Insurance 3,000.00
Total Insurance Expense 3,000.00
Jason Zollinger Artist
Advertising and Promotion 1,960.00
Art Supplies 19,600.00
Bank Service Charges 96.00
Dues and Subscriptions 375.00
Interest Expense 1,100.00
Office Supplies 465.00
Taxes and Licenses 400.00
Telephone Expense 498.00
Total Jason Zollinger Artist 24,494.00
Medical
Doctor CoPay 2,700.00
Prescriptions CoPay 1,200.00
Total Medical 3,900.00
8:24 PM 10/26/14 Cash Basis
Jason and Judith Zollinger II Profit & Loss
January through December 2013
Page 2 of 2
Jan - Dec 13
Personal Residence 1234 Abbey
General Liability Insurance 600.00
Mortgage Interest 1234 Abbey Rd 12,375.00
Property Tax 1234 Abbey Road 4,300.00
Utilities 6,120.00
Total Personal Residence 1234 Abbey 23,395.00
Professional Fees - Accountant 1,200.00
Rental Property 3456 Abbey Road
Depreciation Expense 5,818.00
Insurance 450.00
Mortgage Interest 3456 Abbey Rd 6,500.00
Property Tax 2,450.00
Repairs and Maintenance 600.00
Total Rental Property 3456 Abbey Road 15,818.00
Taxes
Payroll Taxes
Federal Income Tax (FIT)
Estimated payments 16,600.00
Ms. Zollinger 12,500.00
Total Federal Income Tax (FIT) 29,100.00
FICA
Ms. Zollinger 4,857.75
Total FICA 4,857.75
Total Payroll Taxes 33,957.75
Total Taxes 33,957.75 Telephone Expense 300.00
Tuition expense 12,000.00
Total Expense 141,364.75
Net Ordinary Income 58,632.25
Other Income/Expense
Other Income
TJ and Assoc Distribution 2,360.00
Total Other Income 2,360.00
Net Other Income 2,360.00
Net Income 60,992.25
20160523201206task_one_file_2 (1).pdf
TJ and Associates II S Corporation EIN: 12-3456789 Date Incorporated: 01/01/2012 Date S Corporation elected: 01/01/2012 Address: 4801 S. Commercial, Sunshine, FL 00000 Shareholders/Officers: Jess Hawkins Position: Vice President Ownership: 40% SS#: 345-67-8901 W2-Wages: $100,000 Medical: $13,500 Time spent working for corporation: 100% Terri Hawkins Position: President Ownership: 40% SS# 234-56-7890 W2-Wages: $86,500 Medical: $-0- Time spent working for corporation: 100% Judith Zollinger Position: Treasurer Ownership: 20% SS# 543-21-0986 W2 – Wages: $63,500 Medical: $13,500 Time spent working for corporation: 100% Address: 1234 Main Street, Sunshine, FL, 33040 - All meals were while traveling or entertaining prospective clients. - TJ & Associates purchased a new copy machine during the year. The business purchased the asset on June 1 and began using it on July 1. The total cost of the copy machine was $105,000. Ms. Hawkins tells you that she wishes to deduct as much of the copier purchase this year as possible. - Use all appropriate tax methods that minimize taxable income.
Dec 31, 12
ASSETS Current Assets
Checking/Savings Checking 96,883.00 Money Market 120,000.00 Payroll 850.00
Total Checking/Savings 217,733.00
Accounts Receivable Allowance for Doubtful Accounts -503.00 Various AR 16,750.00
Total Accounts Receivable 16,247.00
Total Current Assets 233,980.00
TOTAL ASSETS 233,980.00
LIABILITIES & EQUITY Liabilities
Current Liabilities Accounts Payable
Accounts Payable 13,480.00
Total Accounts Payable 13,480.00
Other Current Liabilities Accrued PR Expense 850.00
Total Other Current Liabilities 850.00
Total Current Liabilities 14,330.00
Total Liabilities 14,330.00
Equity Capital Stock 120,000.00 Retained Earnings 99,650.00
Total Equity 219,650.00
TOTAL LIABILITIES & EQUITY 233,980.00
TJ and Associates II Balance Sheet
Accrual Basis As of December 31, 2012
Page 1
Dec 31, 13
ASSETS Current Assets
Checking/Savings Checking 1,212.00 Money Market 190,000.00 Payroll 4,198.00 Petty Cash 500.00
Total Checking/Savings 195,910.00
Accounts Receivable Allowance for Doubtful Accounts -960.00 Various AR 32,000.00
Total Accounts Receivable 31,040.00
Other Current Assets Prepaid Insurance 6,000.00 Prepaid Office Supplies 2,100.00
Total Other Current Assets 8,100.00
Total Current Assets 235,050.00
Fixed Assets Accumulated Depreciation -21,000.00 Furniture and Equipment 105,000.00
Total Fixed Assets 84,000.00
TOTAL ASSETS 319,050.00
LIABILITIES & EQUITY Liabilities
Current Liabilities Accounts Payable
Accounts Payable 27,850.00
Total Accounts Payable 27,850.00
Other Current Liabilities FICA Payable Employee 797.00 FICA Payable Employer 797.00 FIT Payable 2,604.00
Total Other Current Liabilities 4,198.00
Total Current Liabilities 32,048.00
Long Term Liabilities USA Bank 70,000.00
Total Long Term Liabilities 70,000.00
Total Liabilities 102,048.00
Equity Capital Stock 120,000.00 Distributions -11,800.00 Retained Earnings 99,650.00 Net Income 9,152.00
Total Equity 217,002.00
TOTAL LIABILITIES & EQUITY 319,050.00
2:19 PM TJ and Associates II 05/20/14 Balance Sheet Accrual Basis As of December 31, 2013
Page 1
Jan - Dec 13
Ordinary Income/Expense Income
Accounting Services Income 220,000.00 Consulting Income 72,000.00 Tax Preparation Services Income 98,000.00
Total Income 390,000.00
Gross Profit 390,000.00
Expense Advertising and Promotion 3,200.00 Automobile Expense 5,769.00 Bad Debt Expense 960.00 Charitable Contributions 650.00 Depreciation Expense 21,000.00 Dues and Subscriptions 4,600.00 Insurance Expense
General Liability Insurance 6,000.00 Health Insurance 27,000.00 Professional Liability 8,500.00 Worker's Compensation 324.00
Total Insurance Expense 41,824.00
Interest Expense 8,100.00 Meals and Entertainment 790.00 Office Rent 7,000.00 Office Supplies 4,800.00 Payroll Taxes 19,125.00 Penalties and Fines 95.00 Political Contributions 200.00 Postage and Delivery 500.00 Printing and Reproduction 2,300.00 Professional Fees 1,500.00 Salaries and Wages 250,000.00 Telephone Expense 2,100.00 Travel Expense 1,775.00 Utilities 4,560.00
Total Expense 380,848.00
Net Ordinary Income 9,152.00
Net Income 9,152.00
TJ and Associates II Profit & Loss
Accrual Basis January through December 2013
Page 1
20160523210207wgu_c239_task_one___two.odt
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Task One:
Introduction:
A tax professional is called upon to prepare various types of tax returns. When a client hires a tax accountant, it is a reasonable expectation that the accountant is well-versed in current tax laws for both planning and compliance purposes.
This task will allow you to apply your tax professional knowledge to a real-world tax scenario. By completing this task, you will generate the K-1 form needed for task 2. The tax forms needed to complete this task can be found on the IRS website (see "IRS" web link below).
Requirements:
A. Complete page 1 of Form 1120S using the information in the attached “Client Organizer - TJ & Associates.”
1. Insert the correct number for Gross Receipts on Line 1a.
2. Insert the correct number for Gross Profit on Line 3.
3. Insert the correct number for Total Income on Line 6.
4. Insert the correct number for Total Deductions on Line 20.
5. Insert the correct number for Ordinary Business Income (Loss) on Line 21.
B. Complete Schedule K in Form 1120S using the information in the attached “Client Organizer - TJ & Associates.”
1. Insert the correct number for Ordinary Business Income (Loss) on Line 1.
2. Insert the correct number for Charitable Deductions on Line 12a.
3. Insert the correct number for Distributions on Line 16d.
C. Complete Schedule K-1 for Mr. Zollinger in Form 1120S using the information in the attached “Client Organizer - TJ & Associates.”
1. Insert the correct number for Ordinary Business Income (Loss) on Line 1.
2. Insert the correct number for Other Deductions on Line 12a.
3. Insert the correct number for Items Affecting Shareholder Basis on Line 16d.
D. When you use sources, include all in-text citations and references in APA format.
Task Two
Introduction:
In this task, you will use your knowledge of tax returns to complete a complex individual federal tax return. Copies of the needed tax forms can be found on the IRS website (see “IRS” web link below). Because you will need to utilize the K-1 form generated as a part of task 1, it is recommended that you pass task 1 before completing this task.
Scenario:
Mr. and Mrs. Zollinger are married and will be filing their taxes jointly for 2013. They reside in the state of Florida. Refer to the attached “Client Organizer - Zollinger” for the information needed to proceed with this task. You will also need to use the “Schedule K-1” that you created as part of task 1.
Requirements:
A. Submit the completed Form 1040 for the 2013 Federal Income Tax Return for Mr. and Mrs. Zollinger.
Note: You can access Form 1040 online at www.irs.gov .
1. Prepare pages 1–2 of Form 1040 for the Zollingers.
a. Insert the correct number for Total Income on Line 22.
b. Insert the correct number for Adjusted Gross Income on Line 37.
c. Insert the correct number for Itemized Deductions on Line 40.
d. Insert the correct number for Exemptions on Line 42.
e. Insert the correct number for Taxable Income on Line 43.
f. Insert the correct number for Tax on Line 44.
2. Prepare Schedule A for the Zollingers.
a. Insert the correct number for Medical and Dental Expenses on Line 1.
b. Insert the correct number for Input Required on Line 2.
c. Insert the correct number for Line 3.
d. Insert the correct number for Line 4.
e. Insert the correct number for State and Local on Line 5.
f. Insert the correct number for Real Estate on Line 6.
g. Insert the correct number for Line 9.
h. Insert the correct number for Home Mortgage Interest on Line 10.
i. Insert the correct number for Line 15.
j. Insert the correct number for Gifts by Cash or Check on Line 16.
k. Insert the correct number for Line 19.
l. Insert the correct number for Total Itemized Deductions on Line 29.
3. Prepare Schedule B for the Zollingers.
a. Insert the correct number for Part I Interest Income on Line 4.
b. Insert the correct number for Part II Dividend Income on Line 6.
4. Prepare Schedule C for the Zollingers.
a. Insert the correct number for Gross Income on Line 7.
b. Insert the correct number for Total Expenses on Line 28.
c. Insert the correct number for Net Profit or (Loss) on Line 31.
5. Prepare Schedule D for the Zollingers.
a. Insert the correct number for Net Long-Term Capital Gain or (Loss) on Line 15.
b. Insert the correct number for Line 16.
6. Prepare Schedule E for the Zollingers.
a. Insert the correct number for Line 28.
b. Insert the correct number for Total Partnership and S-Corporation Income or (Loss) on Line 32.
c. Insert the correct number for Line 41.
7. Prepare Schedule SE for the Zollingers.
a. Insert the correct number for Line 3.
b. Insert the correct number for Line 4.
c. Insert the correct number for Self-Employment Tax for Line 5.
d. Insert the correct number for Deduction for one-half of Self-Employment Tax for Line 6.
Note: Peripheral information that does not affect the computation of taxable income (e.g., address, social security numbers, presidential election contribution) may be left blank. If information is not provided, assume the answer is “no.”
