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Using 2022 IRS forms and the information below, prepare the federal income tax return for William (SSN: 150-52-0546) and Joyce (SSN 471-42-5207) Jones. You are welcome to use any tax return preparation software. But you must include with the completed forms statements explaining your reasoning for the treatment of your entries (1-21 below) on the return. The taxpayers live at 1040 Connecticut Avenue in Washington, D.C. 20016. William is 52 and Joyce is 51 as of the end of the taxable year. William is a manager for ABC Corporation, a firm that manufactures and distributes widgets. Joyce is a self-employed author of childrens books. The Jones have two children, Will, 21 (SSN 372-46-2611) and Tom, 16 (SSN 375-49-6511), full time students who have no income. Tom lives at home while Will is a sophomore at American University(EIN: 54-345678) residing in a $1,000 per month apartment that his parents pay for. The Jones also pay Wills tuition of $25,000. The Jones are on the cash method of accounting and they filed an extension for 2022 with which they paid $1,000. They wish to minimize their tax by deferring income, accelerating deductions and taking advantage of any suggestion you have in preparing the return. The taxpayers do not wish to contribute to the presidential election campaign fund. The family has health insurance coverage from Williams employer. They claimed the standard deduction on their 2020 return. 1. Williams W-2 consists of the following: Box 1 - Wages $200,000 2 - Withholding - Fed 30,000 - D.C. 12,000 12d - Pension contribution (401k) 20,000 2. The taxpayers received the following interest payments: Bank of Switzerland, Geneva (Account balance $50,000) $100 New York State Bonds 100 New York City Bonds 200 Puerto Rico Bonds 50 2 Ford Motor Co. Bonds 75 3. Joyce and her brother are co-owners of a furniture-restoration business. Joyce owns 30 percent but does not work in the business relying on her brother who owns 70 percent of the business. The business was formed as an S corporation. Joyce purchased the stock for $31,000, her share of the corporations loss for the year is $5,000. 4. The Joness received a federal income tax refund of $1,200 on May 12, 2022, and on May 15, 2022, received a refund from the District of Columbia for $900. 5. Joyce is the lucky caller to a local radio station and wins a tablet. She has not received a 1099-MISC, but in announcing the prize, the radio station host said that the manufacturers suggested retail price for the tablet is $500. However, Joyce has a catalog from Best Buy that advertises the tablet for $400. 6. The Jones receive a Form W-2G from a local casino showing gross winnings of $5,000 and $1,500 of federal withholding tax. Joyces best recollection is that she lost $6,000 gambling during the year. 7. On June 26, William receives a check for $17,000 (face value of $16,500 plus $500 interest) from the United Insurance Corporation, as a result of being the designated beneficiary of an insurance policy on the life of his uncle. His uncle had paid a premium on the policy of $4,000. 8. Joyce makes 4 business trips, each 3 days long, flying to meet with various publishers. She also made 2 one day trips that are close to home taking the train and returning on the same day. In December 2022, Joyce receives an advance on her next book. Under the contract, Joyce is scheduled to begin work on the book the following February, and must have it completed by November. Information on Joyces business is listed below. Royalty: West Publishing $ 7,000 Publishers Advance $ 2,000 Train Tickets $ 1,000 Airfare $ 2,000 Lodging $ 3,000 Meals $ 2,000 Home Telephone - one line 25% used for business $ 1,000 3 9. In January, Joyce purchases a new car for $15,000 to use in her business. Joyce pays $5,000 in cash and finances the balance through the dealer, paying $200 of interest on the loan for the year. During the year she drives 4,000 miles for business and 6,000 for other purposes. Total expenses for operating the car for the year are: repairs and maintenance, $100, insurance, $200 and gasoline, $1,000. 10. At the beginning of the year Joyce set aside a separate room of the house which she uses exclusively for business. The room is 100 square feet of the total 5,000 square feet of the house. The taxpayers purchased the home several years ago for $70,000 with 20 percent of the purchase price attributable to the land. The total household expenses for the year are as follows: Heat $2,000 Insurance $1,000 Electricity $1,600 Repairs to kitchen $3,000 Cleaning $1,000 11. On June 1, Joyce sold her old computer system for $400. She had acquired the computer in 2010, for $2,000. When the taxpayers prepared their 2010 tax return they elected to expense the computer using Section 179. The computer was used exclusively in her business. 12. William began work on his MS in accounting at American University in order to become a CPA. He paid $4,000 in tuition. 13. William and Joyce each contribute the maximum to their respective IRA accounts for the year. The IRA account is Joyces only retirement vehicle. In addition, William and Joyce contributed $2,000 to a Coverdell Education Savings Account for Tom. 14. In June the taxpayers 2012 personal use station wagon is totaled during a hurricane. The car was purchased for $28,700. The taxpayers received a check for $5,000 from Insurance Company that represents the fair market value of the car minus a $750 deductible. They replaced the car with a new car costing $31,400. 15. The taxpayers incurred the following medical expenses before receiving $700 reimbursement from their health insurance policy: Medical Premiums $4,000 4 Doctors $1,000 Chiropractor $ 600 Dentist $1,000 Vet Fees (family dog) $ 300 Prescription Drugs $ 300 Over-the-counter drugs (aspirin, cough syrup) $ 200 16. The taxpayers pay the following property taxes: House $5,000 Car (ad valorem) $ 500 17. The taxpayers paid the following amounts of interest. Bank of America (4400 Mass Ave.) $5,000 (Mortgage of $50,000) Sun Trust Home Equity Loan of $10,000 used to pay Nordstroms credit card $1,000 Bank of America Mastercard $ 200 18. The taxpayers made a cash contribution to American University of $100. They also donated property to the Salvation Army at High Street in Washington, D.C. on July 15: Property FMV (self-appraised) Original Cost Date Acquired Antique Table $400 $225 1/4/02 Dishwasher $100 $700 5/6/06 19. The taxpayers incur the following expenses: Type Amount 5 Prior year tax preparation fee (paid in current year) $840 Safety deposit box $55 Investment advice $1,120 Business publication (William) $675 20. In January, William inherited his fathers summer home that had a fair market value of $500,000 at the date of his fathers death. His parents had purchased the house many years ago for $100,000, 20% of which was attributable to the land and made $75,000 worth of capital improvements to it. William decides to rent the property and actively participates in finding a tenant and managing the property. The property is first advertised for rent on January 1, but is not rented until June 1. William provides the following income and expense information for the property: Rent $20,000 Repairs $5,000 Property taxes $10,000 Insurance $2,000 21. The taxpayers sold the following securities during the year. The selling price listed is net of brokerage commissions and represents the amount the taxpayers receive from the sale. All information is reported on Form 1099B. Date Sold Date (all sales in Sale Purchase Stock Acquired current year) Price Price 150 shares Pfizer Corporation 5/12/90 8/15 $ 6,000 $7,500 6 50 shares Alcoa 6/10/07 10/23 $ 500 $2,000 25 shares Luminent 4/28/CY 9/4 $ 3,000 $1,000 60 shares Textron 9/11/CY 10/27 $10,000 $9,00

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