INDIVIDUAL TAX RETURN PROBLEM 2
Required:
• Use the following information to
complete Karl and Ellie Frederickson’s 2011 federal income tax return. If
information is missing, use reasonable assumptions to fill in the gaps.
• You may need the following forms
to complete the project: Form 1040 and Schedule A. The forms, schedules, and
instructions can be found at the IRS
Web site (www.irs.gov). The
instructions can be helpful in completing the forms.
•An Excel spreadsheet with all
your detailed calculations and narratives explaining how you arrived at your
numbers are REQUIRED for this assignment.
Facts:
1. Karl Frederickson is employed
as a human resources manager for Toys Unlimited, Inc., and Ellie is a financial
planner for her mother’s company,Frederickson Investments, Inc., a full service
wealth planning firm. They provide the following information:
• They both want to contribute to
the presidential election campaign.
• They live at 9876 Fighting Irish
Lane, South Bend, IN.
• Karl’s birthday is XXXXX and his
Social Security number is XXXXX
• Ellie’s birthday is XXXXX and
her Social Security number is XXXXX
• Karl or Ellie do not have any
foreign bank accounts or trusts.
2. Karl received a Form W-2 from
Toys Unlimited, Inc. that contained the following information:
• Line 1 Wages, tips, other compensation:
$45,000
• Line 2 Federal income tax
withheld: 7,500
• Line 3 Social Security wages:
45,000
• Line 4 Social Security tax
withheld: 1,890
• Line 5 Medicare wages and tips:
45,000
• Line 6 Medicare tax withheld:
653
• Line 17 State income tax: 2,200
3. Ellie received a Form W-2 from
Frederickson Investments, Inc. that contained the following information:
• Line 1 Wages, tips, other
compensation: $85,000
• Line 2 Federal income tax
withheld: 12,500
• Line 3 Social Security wages:
85,000
• Line 4 Social Security tax
withheld: 3,570
• Line 5 Medicare wages and tips:
85,000
• Line 6 Medicare tax withheld:
1,233
• Line 17 State income tax: 4,200
Appendix C C-3
4. Karl and Ellie incurred the
following medical expenses for the year:
• Transportation to Chicago for
Karl’s cancer treatment: 2,000 miles
• Unreimbursed hospital charges
for Karl: $6,500
• Unreimbursed prescription drug
charges for Karl and Ellie: 1,750
• Unreimbursed physician charges
for Karl and Ellie: 2,200
• Unreimbursed prescription
glasses for Ellie: 150
• Laser hair treatment for Ellie
(so that she will no longer need to shave her legs) 2,000
5. Karl and Ellie paid $12,000 of
interest payments on their primary residence (acquisition debt of $225,000).
They also paid $1,750 of interest expense on Ellie’s car loan and $500 of
interest on their Visa card.
6. Karl and Ellie paid $4,000 of
real estate taxes on their home and $1,000 of real estate tax on a vacant lot
they purchased with the hope of building their dream home in the future. They
also paid $3,000 in sales tax on Ellie’s car and other purchases and $1,000 of
ad valoreum tax on their cars.
7. Karl and Ellie made the
following contributions this year:
• American Red Cross $ 200
• United Way 150
• St. Joseph’s Catholic Church
8,000
• Food for the family of Hannah
Barbara (a neighbor 225
who suffered a tragic car accident
this past year).
• Stock transfer to the University
of Notre Dame (originally 750
purchased for $1,000 in 2005)
8. Karl incurred $4,000 of
unreimbursed meals and entertainment related to his job. Ellie incurred $1,200
of expenses for investment publications, and last year they paid their CPA $500
to prepare their tax return.
9. The roof on Karl and Ellie’s
house was severely damaged in a hail storm. They had to replace the roof
($7,500), which unfortunately was not covered by insurance because of their
high deductible ($10,000).
10. Karl won $5,000 in the state
lottery. He has been playing the lottery for years ($10 in lottery tickets
every week ($520 in total) that he saves to keep track of the numbers he
plays).
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
