ACCT130 – Portfolio Project 7
Problem 1
Carl Baker is a 63-year-old widower. He had income for 202X as follows:
· Pension from former employee $39850
· Interest income from Bean Bank $5500
· Interest income on City of Bean bonds $4500
· Dividends received from Costco stock held for over one year. $2000
· Social security benefits $14000
· Rent income on house $9000
· Collections on annuity contract he purchased from Good Intentions Insurance: $5400
The cost of the annuity was $46800 and Carl was expected to receive a total of 260 monthly payments of $450. Carl has received 22 payments so far through 202X
Carl’s daughter, Sasha (who is 40 years old), bo
owed $60k from Carl on January 5th, 202X and used the proceeds to form a new business. He does not charge Sasha interest because she couldn’t afford it. However, he does expect to collect the principal eventually. Sasha is living with Carl until the business becomes profitable. Except for housing, Sasha provides her own support from her business and $1600 in dividends on stocks she received/inherited from her mother.
Other relevant information on the rental home:
· Utilities = $2800
· Maintenance costs - $1000
· Depreciation = $2000
· Real estate taxes = $750
· Insurance = $700
· State income taxes paid = $3500
· County personal property taxes paid = $2100
· Payments on estimated 2017 FIT = $5900
· Charitable contributions of cash to Bean Church = $7400
· Federal interest rate 6%
· Sales taxes paid = $912
Required: Determine Carl’s Federal tax for XXXXXXXXXXThis assignment will give you an opportunity to complete a cu
ent Form 1040 (U.S. Individual Income Tax Return), using the information below. Please use the fillable PDF form located here https:
www.irs.gov/pu
irs-pdf/f1040.pdf. Complete the form using the information provided in the scenario below, save it to your computer, and then upload to the dropbox in Blackboard.
Problem 2
· Due by the end of Week 6 at 11:59 pm, ET.
Mike Smith is 40 years old and is ma
ied to May Smith, and both are clients of ABC Tax Firm that have come to you to file their Federal taxes. The Smiths live at 550 Beacon Road, Neverland, VA XXXXXXXXXXThe couple files a joint return and have two dependent kids, Cheryl, age 17, and Judge, age 18. In 202X, Mike and his wife had the following transactions:
· Mike received $120k in salary from Blue Metal Corporation, where he is an Engineer. Withholding for Federal income tax was $10750. The amounts withheld for FICA were: $7049 for Social Security and $1,740 for Medicare. Mike worked in Mexico from January 1st, 20XX, until Fe
uary 20th of the following year. His $120k salary for 202X includes $18k he earned for January and one-half of Fe
uary 202X while in Mexico.
· Mike and May received $400 interest from Martin Country school bonds.
· Mike received $2300 interest from a Cari
ean bank account.
· May received 50 shares of Bluebell Corporation common stock as a stock dividend. The shares had a fair-market value of $2500 at the time May received them, and she did not have the option of receiving cash.
· Mike and May received a $1200 refund on their prior year’s Virginia income taxes. Their itemized deductions in that year totaled $14k.
· Mike paid $6600 alimony to his ex, Pearl S. Moss. The divorce was finalized 3 years ago.
· Mike and May kept the receipts for their sales taxes paid of $1100.
· Mike and May’s itemized deductions were as follows:
· State income tax paid /withheld = $5100.
· Real estate taxes on their main residence were $3700.
· Mortgage interest on their principal residence was $2500.
· Cash contributions to their church totaled $2800.
Required: Determine Smith’s federal tax. This assignment will give you an opportunity to complete a cu
ent Form 1040 (U.S. Individual Income Tax Return), using the information below. Please use the fillable PDF form located here https:
www.irs.gov/pu
irs-pdf/f1040.pdf. Complete the form using the information provided in the scenario, save it to your computer, and then upload to the dropbox in Blackboard. Make realistic assumptions about any missing data, such as the Social Security numbers