Topic 8 Tax Return Problem Data Set B, Problem C:11-62
You will be working individually to complete an S-corporation tax return and an individual income tax return. The completed tax returns can be submitted in paper copy during class (if uploaded to LoudCloud – please scan and upload one single document. Note if you upload multiple documents, the assignment will not be graded and you will be required to turn in a paper copy or resubmit a single document with possible late point deductions). Use 2019 forms only (points will be deducted for using 2018 or 2020 forms).
Required
Prepare an S-corporation tax return. See data below. You will need the following forms:
Form 1120S and corresponding schedules, including Schedules L and M-1. Assume all items are for the tax year ended 12/31/19 instead of 2018. Use 2019 tax forms.
Schedule K-1 for Leisa Bailey (from Problem C:11-62). For the Schedule K-1, use the address and SSN information below for Leisa.
Schedule D for Form 1120-S
Form 1125-A for inventory
Form 4652 – note, assume the property for which the Sec. 179 deduction is desired was placed in service in 2019.
Individual Taxpayer Information
Individual tax forms required:
Form 1040
Schedule 1
Schedule 3
Schedule A
Schedule B
Schedule D
Schedule E
Form 8949
Form 8995
1.Herman A. Bailey’s social security number is XYZ-12-3789. He is married but does not have any dependents. His wife’s name is Leisa H. Bailey and her social security number is XYZ-45-6789. They live 1200 First Pike, City ST 12345.
2.Additional information to complete the tax returns:
a.Herman works at Intel Corporation and earned $160,000 during the tax year. His federal tax withholding was $50,000 and Arizona income taxes withheld were $8,000.
b.Leisa is an employee of Healthwise Medical Supplies Company and earned a salary of $120,000. Her federal tax withholding was $40,000 and Arizona income taxes withheld were $7,000.
c.Leisa made estimated tax payments of $110,000 throughout the year.
d.Mortgage interest on their personal residence was $25,200 and property taxes were $5,150. The loan value of their home is less than $750,000.
e.Herman and Leisa earned $2,000 from their interest-bearing savings account at Canyon State Credit Union.
f.They did not make any additional charitable contributions during the year.
g.Herman and Leisa paid $10,000 for health insurance premiums through pretax payroll deductions. They also paid $6,000 for qualified medical related costs during the year.
h.On July 10, 2018, they sold 1,000 shares of Intel Corporation stock for $70 per share. They purchased the stock on May 1, 2012, for $56 per share.
i.The taxpayers have a long-term capital loss carry forward of $200,000.
j.Assume AMT does not apply.
k.Assume QBI does not apply (and it does not because their taxable income exceeds $415,000 – you will find the QBI item on line 9 of from 1040).
l.Apply any refund to estimated tax payments for the next year.
m.Hints: Schedule K-1 reports investment interest expense to the shareholders. Remember, investment interest expense is only deductible to the extent of investment income.
3.Download the appropriate tax forms from the IRS website (www.irs.gov). Include any necessary supporting schedules and supporting documentation. Use 2019 tax forms only (points will be deducted for using incorrect forms).
4.If submitting to LoudCloud, create one PDF file with all of the tax forms in the order they should appear in a submitted tax return. If submitting paper copy, remember to put the forms in the proper order. Points will be deducted for out-of-order form placement. Remember to include the appropriate taxpayer information on the forms, as points will be deducted for missing items.
