50.1K

Verified Solution

Link Copied!

Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth was born on July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund. The following information is shown on Beth's 2016 Wage and Tax Statement (Form W2).

Line Description Amount 1 Wages, tips, other compensation $ 65,000.00

2 Federal income tax withheld 10,500.00

3 Social Security wages 65,000.00

4 Social Security tax withheld 4,030.00

5 Medicare wages and tips 65,000.00

6 Medicare tax withheld 942.50

15 State Arizona

16 State wages, tips, etc. 65,000.00

17 State income tax withheld 1,954.00

Other 2016 transactions include the following. Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099INT. She received qualified dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth's dividend payments on a Form 1099DIV.

Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2016. On her 2015 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld by her employer.

Fees earned from her part-time tax practice totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service.

On February 8, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, Beth sold the stock for $14 a share.

Beth bought a used sport utility vehicle for $6,000 on June 5. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, she sold the vehicle to a friend for $6,500.

On January 2, Beth acquired 100 shares of Blue Corporation common stock for $30 a share. She sold the stock on December 19 for $55 a share.

Beth records revenues of $16,000 from the sale of a software program she developed. Beth incurred the following expenditures in connection with her software development business.

Cost of personal computer (100% business use) $7,000

Cost of printer (100% business use) 2,000

Furniture 3,000

Supplies 650

Fee paid to computer consultant 3,500

Beth elected to deduct the maximum portion of the cost of the computer, printer, and furniture allowed under the provisions of 179. These items were placed in service on January 15 and used 100 percent in her business.

Although her employer suggested that Beth attend a convention on current developments in corporate taxation, Beth was not reimbursed for the travel expenses of $1,420 she incurred in attending the conference. The $1,420 included $200 for meals.

Beth paid $300 for prescription medicines and $2,875 in physician and hospital bills. Medical insurance premiums were paid by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage at Valley National Bank was $3,845, and interest paid to credit card companies totaled $320. Beth contributed $2,080 to various qualified charities during the year. Professional dues and subscriptions totaled $350.

Beth paid $1,000 in estimated Federal income taxes throughout the year. She was covered for the entire year by Mesa Manufacturing's health insurance policy.

Before you begin See the earlier instructions for linella to see if you can use this worksheet to figure your tax. Before completing this worksheet, complete Form 1040 through line 10. If you don't have to file Schedule D and you received capital gain distributions, be sure you checked the box on line 13 of Schedule 1. 1. Enter the amount from Form 1040, line 10. However, if you are failing Form 2555 or 2555-EZ (relating to foreign earned income), ente amount line 3 of the Foreign Earned Income Tax Worksheet .. Enter the amount from Form 1040, line 3a* ....... Are you filing Schedule D?* Yes. Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or 16 is blank or a loss, enter-O- No. Enter the amount from Schedule 1, line 13. 4. Add lines 2 and 3 ... 5. If filing Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that form. Otherwise, enter-O- 6. Subtract line 5 from line 4. If zero or less, enter -- .... 7. Subtract line 6 from line 1. If zero or less, enter -- ....... 8. Enter: $38,600 if single or married filing separately, $77,200 if married filing jointly or qualifying widow(er). $51,700 if head of household 9. Enter the smaller of line 1 or line 8 ........ 10. Enter the smaller of line 7 or line 9 ......... 11. Subtract line 10 from line 9. This amount is taxed at 0% ... Enter the smaller of line 1 or line 6 ......... 13. Enter the amount from line 11 14. Subtract line 13 from line 12 ..... 15. Enter: $425.800 if single, $239,500 if married filing separately, $479,000 if married filing jointly or qualifying widow(er), $452,400 if head of household 16. Enter the smaller of line 1 or line 15 17. Add lines 7 and 11 ... 18. Subtract line 17 from line 16. If zero or less, enter-O..... 19. Enter the smaller of line 14 or line 18, 20. Multiply line 19 by 15% (0.15) ............ 21. Add lines 11 and 19 ..... 22. Subtract line 21 from line 12 ... Multiply line 22 by 20% (0.20) ..... Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet Add lines 20, 23, and 24 .... Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet Tax on all taxable income. Enter the smaller of line 25 or 26. Also include this amount on the entry space on Form 1040, line lla. If you are filing Form 2555 or 2555-EZ, don't enter this amount on the ice on Form 1040, linella. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet ........................................ * If you are filing Form 2555 or 2555-EZ, see the footnote in the Foreign Earned Income Ta Torksheet before completing this one. ...... 27

Answer & Explanation Solved by verified expert

See Answer