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Chapter 12 Cumulative Problem (Chapters 1-12) Please fill out form 1040,8949,4562,8829 and Schedules A,B,C,D,E,SE

12-36 Essentials of Federal Income Taxation CUMULATIVE PROBLEM (CHAPTERS 1-12) og Apps til a se che lo Examples 10-12 to have $5 toga Jerry R. lage 52. SSN 367-83-9403) and Janet K. (age 48, SSA361-73-4098) A return. They reside at 410 E Vernon Avenue, Carlock, Illinois 61725-1287.1. Information to prepare the Aposes' tax return. Use the approach shown in Exam Chapter 1l to compute the Appscs' tax liability (1101.03). They both elect to b de Presidential election campaign fund and file their return on April 10, 2019 5-26-438.), provide weshalt of dwin received $4.5 Terry is an Ich carcin The Appses' household includes David A. Apps, their 12-vear-old son (SSN 965-26-4 Edwin R. Apps (SSN 157-43-2587), Jerry's 78-year-old father. Janet and Jerry provide the support of both David and Edwin. David has no income of his own; Edwin recen in nontaxable social security benefits during the year. Jerry works as a carpenter. The information on his Form W-2 is shown below. Jerry participate in his employer's 401(k) plan. Through his employer, Jerry buys health carci for his family that complies with the ACA mandate. $52,000 Social security and Medicare tax withheld 3,978 Federal income tax withheld 4,970 State income tax withheld 2,490 Taxable wages Janet owns and operates J&J Networking. The principal business code is 454390. Jana no employer ID number. She uses the accrual basis in her business and the cost method valding the inventory. No changes have been made in the inventory system. Janet opera business for all 12 months and has an office in her home that she uses exclusively and regular Business, Janet materially participates in the business. Information relating to her operation is as follows. Gross receipts Returns and allowances Beginning inventory Purchases Ending inventory $60,950 900 2.700 28,625 3.825 Expenses: Advertising Bank service charges Contribution to SIMPLE plan Commissions Depreciation on equipment placed in service in 2016 Dues and publications Insurance (business) $ 400 24 10,000 3,200 $ 80 310 Office expense Supplies Travel Meals Business seminars Other business taxes Miscellaneous expenses Postage expense 1,035 490 1,000 560 1,700 220 650 35 110 In addition to the above expenses, Janet uses her personal car in her business. She keeps records of her business mileage and uses the standard mileage method. The car was first lic the business on May 1, 2016. During 2018 Janet drove 7,631 miles, of which 1,262 were drive for business. The rest were personal miles. NOLS, AMT, and Business Tax Credits 12-37 Information related to the Appses' home Total area of home Area used for business FMV of home, for purposes of Form 8829. line 36 Adjusted basis of home, for purposes of Form 8829. line 56 Value of land, Form 8829, line 37 Year the home office was first placed in service Mortgage interest Real estate taxes Homeowner's insurance Utilities 1,800 square feet 180 square feet $240,000 195.000 20,000 1991 $6,250 2,400 680 3.200 The Appses own a fent PPses own a four-unit apartment building that they actively manage. They paid MACRS to depreciate the building, which is located at 1 am in 1994. Of this amount. $25.000 was allocated to the land. The Appses use puuuu All units were rented for the entire year. Information on the apar cate the building, which is located at 19 Sunset Road in Carlock, IL 60501, of the entire year. Information on the apartments is shown below Rental revenue Rental expenses: $33,600 Real estate taxes $ 1,800 Utilities 1.780 Insurance 1,550 Cleaning and maintenance 5,200 Legal and professional fees 125 Mortgage interest 7,200 Repairs 827 Supplies 325 The Appses had other income consisting of the following. Neither Jerry nor Janet had any interest in a foreign trust or bank account. Interest from Champion Savings Interest on bonds from the State of Illinois Qualified dividends from General Morris Corporation Qualified dividends from Eagle Corporation Qualified dividends from Roper Corporation $2,750 930 425 150 650 The Appses have a $4,950 long-term capital loss carryover from 2017. They also sold the following shares of common stock during 2018. No cost basis was provided on any of the Form 1099-Bs. Number of Shares 100 Date Acquired 5-1-10 2-14-18 3-16-12 3-14-17 Company Roper Corp Fastco Corp. Eagle Corp. Souch Corp. Cost $5,000 3,250 6,200 1,500 Date Sold 6-12-18 7-20-18 8-10-18 1-24-18 Sales Price $7,500 2,950 8,100 6,500 50 200 100 12-38 Essentials of Federal Income Taxation A summary of the receipts for payments the Appses made during the year includes Medical expenses (unreimbursed): David $ 25 "Sosa Edwin $1,000 200 30 $ 200 500 40 1.800 200 2,100 Jerry Prescription medicines $ 50 Doctor bills 60 Dentist bills 150 Hospital bills Transportation Eyeglasses Over-the-counter medicine 0 39 24 3,900 120 122 50 125 30 $1,200 25 Taxes: Sales tax Balance due on 2017 state income tax return Balance due on 2017 federal income tax return Real estate taxes 725 2.400 Interest: Mortgage interest Credit card interest $6,250 975 Cash contributions: Church United Way Presidential election campaign $2,300 250 50 In addition to the cash contributions, the Appses donated five shares of S&W common stock to their church on July 30. The stock had been purchased on December 15, 2016, for $2,200. The fair market value of the stock on July 30 was $6,000. Janet and Jerry each contribute the maximum amount allowed for 2018 to their respective (traditional) IRAs. They also make the following other payments during the year: $ 120 Rental of safe deposit box for securities Tax preparation fee (2017 Form 1040) Jerry's union dues Automobile registration 524 1,200 150 12-36 Essentials of Federal Income Taxation CUMULATIVE PROBLEM (CHAPTERS 1-12) og Apps til a se che lo Examples 10-12 to have $5 toga Jerry R. lage 52. SSN 367-83-9403) and Janet K. (age 48, SSA361-73-4098) A return. They reside at 410 E Vernon Avenue, Carlock, Illinois 61725-1287.1. Information to prepare the Aposes' tax return. Use the approach shown in Exam Chapter 1l to compute the Appscs' tax liability (1101.03). They both elect to b de Presidential election campaign fund and file their return on April 10, 2019 5-26-438.), provide weshalt of dwin received $4.5 Terry is an Ich carcin The Appses' household includes David A. Apps, their 12-vear-old son (SSN 965-26-4 Edwin R. Apps (SSN 157-43-2587), Jerry's 78-year-old father. Janet and Jerry provide the support of both David and Edwin. David has no income of his own; Edwin recen in nontaxable social security benefits during the year. Jerry works as a carpenter. The information on his Form W-2 is shown below. Jerry participate in his employer's 401(k) plan. Through his employer, Jerry buys health carci for his family that complies with the ACA mandate. $52,000 Social security and Medicare tax withheld 3,978 Federal income tax withheld 4,970 State income tax withheld 2,490 Taxable wages Janet owns and operates J&J Networking. The principal business code is 454390. Jana no employer ID number. She uses the accrual basis in her business and the cost method valding the inventory. No changes have been made in the inventory system. Janet opera business for all 12 months and has an office in her home that she uses exclusively and regular Business, Janet materially participates in the business. Information relating to her operation is as follows. Gross receipts Returns and allowances Beginning inventory Purchases Ending inventory $60,950 900 2.700 28,625 3.825 Expenses: Advertising Bank service charges Contribution to SIMPLE plan Commissions Depreciation on equipment placed in service in 2016 Dues and publications Insurance (business) $ 400 24 10,000 3,200 $ 80 310 Office expense Supplies Travel Meals Business seminars Other business taxes Miscellaneous expenses Postage expense 1,035 490 1,000 560 1,700 220 650 35 110 In addition to the above expenses, Janet uses her personal car in her business. She keeps records of her business mileage and uses the standard mileage method. The car was first lic the business on May 1, 2016. During 2018 Janet drove 7,631 miles, of which 1,262 were drive for business. The rest were personal miles. NOLS, AMT, and Business Tax Credits 12-37 Information related to the Appses' home Total area of home Area used for business FMV of home, for purposes of Form 8829. line 36 Adjusted basis of home, for purposes of Form 8829. line 56 Value of land, Form 8829, line 37 Year the home office was first placed in service Mortgage interest Real estate taxes Homeowner's insurance Utilities 1,800 square feet 180 square feet $240,000 195.000 20,000 1991 $6,250 2,400 680 3.200 The Appses own a fent PPses own a four-unit apartment building that they actively manage. They paid MACRS to depreciate the building, which is located at 1 am in 1994. Of this amount. $25.000 was allocated to the land. The Appses use puuuu All units were rented for the entire year. Information on the apar cate the building, which is located at 19 Sunset Road in Carlock, IL 60501, of the entire year. Information on the apartments is shown below Rental revenue Rental expenses: $33,600 Real estate taxes $ 1,800 Utilities 1.780 Insurance 1,550 Cleaning and maintenance 5,200 Legal and professional fees 125 Mortgage interest 7,200 Repairs 827 Supplies 325 The Appses had other income consisting of the following. Neither Jerry nor Janet had any interest in a foreign trust or bank account. Interest from Champion Savings Interest on bonds from the State of Illinois Qualified dividends from General Morris Corporation Qualified dividends from Eagle Corporation Qualified dividends from Roper Corporation $2,750 930 425 150 650 The Appses have a $4,950 long-term capital loss carryover from 2017. They also sold the following shares of common stock during 2018. No cost basis was provided on any of the Form 1099-Bs. Number of Shares 100 Date Acquired 5-1-10 2-14-18 3-16-12 3-14-17 Company Roper Corp Fastco Corp. Eagle Corp. Souch Corp. Cost $5,000 3,250 6,200 1,500 Date Sold 6-12-18 7-20-18 8-10-18 1-24-18 Sales Price $7,500 2,950 8,100 6,500 50 200 100 12-38 Essentials of Federal Income Taxation A summary of the receipts for payments the Appses made during the year includes Medical expenses (unreimbursed): David $ 25 "Sosa Edwin $1,000 200 30 $ 200 500 40 1.800 200 2,100 Jerry Prescription medicines $ 50 Doctor bills 60 Dentist bills 150 Hospital bills Transportation Eyeglasses Over-the-counter medicine 0 39 24 3,900 120 122 50 125 30 $1,200 25 Taxes: Sales tax Balance due on 2017 state income tax return Balance due on 2017 federal income tax return Real estate taxes 725 2.400 Interest: Mortgage interest Credit card interest $6,250 975 Cash contributions: Church United Way Presidential election campaign $2,300 250 50 In addition to the cash contributions, the Appses donated five shares of S&W common stock to their church on July 30. The stock had been purchased on December 15, 2016, for $2,200. The fair market value of the stock on July 30 was $6,000. Janet and Jerry each contribute the maximum amount allowed for 2018 to their respective (traditional) IRAs. They also make the following other payments during the year: $ 120 Rental of safe deposit box for securities Tax preparation fee (2017 Form 1040) Jerry's union dues Automobile registration 524 1,200 150

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