Tax Return assigment

i’ll upload a file woth all the info

TAX 4001 Fall 2023 Tax Return Assignment
Prepare a tax return for Tax Year 2022 based on the following facts:
Taxpayer – Jack Johnson, 42 years old
Taxpayer spouse – Jill Johnson 41 years old
Jack and Jill met in 2001 at Markham Park in Sunrise, FL while attending a mountain
bike event. They soon were married and each pursued their love of cycling into
successful careers.
Jack and Jill’s three Kids:
Connor – 19 years old attends University of Florida full-time and lived at home for
the summer. Conner earned $8,000 delivering pizza for the year.
James – 13 years old
Jackie – 10 years old
James and Jackie live full time at home and attend nearby public schools. The
Johnson’s provide all financial support for James and Jackie and the majority of
financial support for Connor.
TP’s live at 415 Spruce Street, Weston, FL 33327. They purchased their home in 2010
for $450,000.
Jack worked at Specialized Bicycles, Ltd as an engineer for many years.
Unfortunately, in 2021 sales slowed for the company and Jack was laid off in
December 2021. Jack applied for and received $6,000 unemployment compensation in
early 2022.
After several job interviews, Jack began work as a design engineer at Santa Cruz
mountain bike company on March 15, 2022 and loves his job. He earned cash
compensation of $85,000 in 2022 which includes $15,000 contributed by the company
towards Jack’s 401-K plan. The company also paid various fringe benefits including
$7,000 towards Jack’s group health insurance and the company paid $900 for Jack
for a $500,000 group life insurance policy that would be paid out to Jack’s beneficiary
should he die. As a holiday bonus, the company allowed Jack to purchase a top spec
Santa Cruz Bronson mountain bike for $4,000. This bike regularly sells for $6,999 and
costs Santa Cruz $5,000 to produce. Santa Cruz’s average markup is 30%.
Jill is self-employed and works as a sales representative for several mountain bike
related companies, as well as surfing and skateboarding companies. She manages a
sales territory that covers all of South Florida. Jill works out of her home and
schedules appointments with cycling and surfing stores and drives to their locations
to introduce new products, track their inventory and take orders for the coming year.
The actual inventory related to these orders is not maintained by Jill, so it is not part
of her business assets. The self-employed professional activity code for a sales
representative is 425120. Jill hired no employees. In 2022 she received gross receipts
of $170,000 and uses the cash basis for taxes. Jill made three quarterly tax prepayments of $3,000 each in 2022. (Schedule C expenses are shown below).
Jill started her business on 5/1/2020. Below are relevant expenses applicable for
Schedule C reporting in 2022:
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Start up costs incurred on 5/1/2020 $7,000
Office furniture (7 yr asset) acquired on 5/1/2020 $4,000
Apple Macbook Pro 16” ( 5 yr asset) acquired on 1/1/2022 $2,900
Apple Macbook Pro 13” (5 yr asset) acquired on 5/1/2020 for $1,800 and
sold for $1,000 on 1/23/2022.
Travel expenses related to work (attending sales expos) $6,600
Meals and Entertainment (taking clients out for meals at restaurants) $4,800
Car and Truck expense: Jill purchased a 2020 Honda Odyssey EX-L for
$36,000 on 5/1/2020 and placed it into service on the same date. In 2022
Jill drove 32,000 total miles, 21,000 miles for business (4,000 miles through
June 30th and 17,000 miles after June 30th). Jill has used the standard
mileage rate in prior years.
Car depreciation $4,147
Car insurance, maintenance and repairs $10,200
Gas $5,600
Supplies $7,500
Business Insurance $2,100
License and fees $1,200
Other expenses $3,300
Jill elected not to claim bonus depreciation on property acquisitions in 2022, did not
make a Sec 179 election and followed MACRS guidelines.
Jack and Jill also received the following cash payments in 2022:
Qualified dividends $6,000
Interest at Bank of America $500
Miami-Dade county municipal interest $300
Gambling income $1,200
Jack invested $70,000 in an annuity in 2016 that pays $10,000 in annual payments
each November for 10 years.
Stock and virtual currency sales as follows:
Date
Purchased
Proctor &
5/6/2021
Gamble
Tesla
1/12/2022
Exxon
3/20/2022
Robinhood 9/02/2020
Crypto
Orion
4/18/2020
Basis
Date Sold
Amount Realized
$7,850
3/20/2022
$ 6,300
17,000
14,700
8,250
11/18/2022
9/01/2022
9/01/2022
21,500
12,400
14,600
7,200
8/08/2022
15,300
FYI – Robinhood Crypto Virtual currency sales are reported like normal stock sales.
Jill sold her coin collection on 8/20/2022 for $7,000. Jill had received the coin
collection as a gift from her Uncle Bob on 1/15/2010. Uncle Bob’s basis in the coins
was $1,500. The FMV on the date of gift was $5,500.
On May 1, 2018 the Johnson’s purchased a house in Doral, FL located by the Trump
National Country Club. The house is held as a rental investment and was placed into
service on June 1, 2018. The property cost $900,000 (of which $300,000 is allocated
to the land) and is located at 4100 Drivers Way, Doral, FL 33178. The Johnson family
resided in the house for personal recreation at the beginning of 2022 totaling 60 days
and then rented the house out 305 days in 2022 to a new tenant. $88,000 in gross
rental receipts was collected in 2022 which included $8,000 that was received in
advance rent for 2023. The Johnson’s allocate rental expenses per the IRS Method.
They use MACRS straight-line depreciation, assuming the mid-month convention. The
Johnson’s personally handle all aspects of renting and care of this property.
Information regarding the rental property items for 2022 are summarized below:
Refundable damage deposit received on 1/2/2022
Property taxes
Interest on mortgage
Repairs
Insurance
Utilities
6,000
9,800
40,500
8,800
7,500
6,000
Jill invested in two limited partnerships which reported the following income and loss
attributable to Jill for 2022. Jill is considered a passive investor.
Jensen Limited Partnership
$ 7,500
Robinson Limited Partnership $(5,300)
The following are cash payments and donations that the Johnson’s paid out in 2022:
Medical expenses:
Insurance premiums $7,200
Surgery – James’s broken arm from playing baseball $2,320 (after insurance
reimbursement)
Medical Co-payments $850
State sales taxes $3,500
Real estate Taxes $7,400
Federal taxes due for 2021 Tax return paid in April 2020 $6,200
Mortgage Interest $14,400
Charitable contributions to IRS recognized charitable institutions:
Cash $9,000
Apple stock purchased on 1/2/2022 for $2,000 and donated on 12/31/2023 when
FMV was $4,000.
Gambling losses $800
REQUIREMENTS
Prepare an income tax return by hand in blue pen (no tax software) with needed schedules
that can be obtained from the IRS website (irs.gov) for the Johnson’s for 2022 Tax Year. You
will need to download applicable schedules for Form 1040 including Schedules 1-2, Schedules
A through E, SE, Form 8949 (or show capital gain/loss transactions and totals on supporting
calculation sheet) and Form 8995-A. Also attach an additional sheet/sheets to show how you
arrived at calculations where applicable (such as Car and Truck expenses, depreciation
calculations, etc). In doing this, use the following guidelines:
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You may complete assignment individually or in groups up to 6 people. Place all
participating student names on cover sheet.
Make necessary assumptions for information not given in the problem but
needed to complete the return.
The taxpayers have the necessary substantiation (e.g., records, receipts) to
support the transactions involved.
If a refund results, the taxpayers want it sent to them.
Regarding possible credits, only consider the child tax credit.