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PROJECT PREPARATION OF FORM 1040 FOR: JOHN C. TAXPAYER (177-26-2904) AND MARY U.

PROJECT PREPARATION OF FORM 1040
FOR: JOHN C. TAXPAYER (177-26-2904) AND MARY U. TAXPAYER(177-34-8861) HUSBAND AND WIFE 2011
YOU ARE TO PREPARE FORM 1040 AND ANY RELATED SCHEDULES BASED ON THE INFORMATION LISTED BELOW:
1. Mr. and Mrs. Taxpayer file on a calendar year basis.
2. See Forms W-2 for wages received by the taxpayers.
3. Mr. Taxpayer has an auto repair business that he operates out of his converted garage. The business generated the following during 2011:
Repair Revenue $528,000



Expenses
advertising
utilities
legal fees
supplies
automobile repairs interest expense (auto) licenses
business taxes Business Mileage

Assets purchased during year (2011):

Machinery

Equipment


10,000 30,000
7,750
4,000 (non-inventory)
12, 350 (trucks-- fully depreciated) 18,000
2,000
6,650
10,000 miles (use .56 per mile)

cost-$27,000

cost-$26,000



Assets purchased in prior years:
Testing Equipment cost $86,000 purchased in 2009 10 year property
Lift Equipment cost $120,000 purchased in 2008 7 year property


Taxpayer wants to take maximum depreciation deduction including section 179. Taxpayer purchased the 2011 property on February 1, 2011. Property is 7-year property.
Cost Allocated to Garage $320,000-purchased in 1999
Real Estate Taxes-Garage 13,500
Interest expense allocated to Garage 12,000
Note: Garage is not attached to the house and is used exclusively for the repair business.
4. The taxpayers received the following
Form K-1- from a partnership-- See Form K-1 attached
5. The taxpayer paid the following personal expenses:
Mortgage Interest $36,000 (residence)
Real Estate Taxes $28,000 (residence)

Contributions
Employee Business expenses Tax Return preparation (2010)


$43,000 (church) $1,000 (CPE courses) $ 2,500



6. The taxpayer sold stock with a cost of $340,000 for $185,000. Stock was purchased 10 years ago and sold on 12/30/2011.Land owned and used by the business (auto repair) was sold for $260,000. The land had a tax basis of $310,000 and was purchased in 2008 .
7. The taxpayers have two children who live with them:
Dawn age-19 SSN: 123-45-1234 full time freshman student-tuition paid by parents $14,000 at LaSalle University. Earned income of $8,000, which she used to buy a car in 2011.
April age-23 SSN: 321-54-6789 attending Williams Auto Repair School on full scholarship. She had $5,000 of earned income in 2011.
Both Children live at home and the total household living expense is estimated to be $80,000
Taxpayers currently live at:
111 Current Ln Cherry Hill NJ 08031
If you have any questions relating to the above information please give me a call. Also Mr. and Mrs. Taxpayer want to take advantage of all tax savings.
You will need tax forms that you can pick-up at any IRS office. or on line at www.irs.gov.
Forms needed: Use 2011 Forms
1040-Page 1 & 2 4797
4562
6251
8949
Schedules needed:
A through E and SE
You may need additional forms based on your assumptions.

5.





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