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ACC 433-01 CHAP 27 HOMEWORK ASSIGNMENT (due 6/3) YOU MUST DO THIS ASSIGNMENT WITH ONE PARTNER WHOM YOU HAVE NOT PREVIOUSLY PARTNERED WITH BEFORE...

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ACC 433-01 CHAP 27 HOMEWORK ASSIGNMENT (due 6/3) YOU MUST DO THIS ASSIGNMENT WITH ONE PARTNER WHOM YOU HAVE NOT PREVIOUSLY PARTNERED WITH BEFORE Prepare a Gift Tax Return (Form 709) based upon Problem 7 of Appendix E in your textbook. A copy of Problem 7 is attached. You can use software such as the HR Block software, which comes with your textbook or other types of commercial software such as Turbo-Tax, LACERTE, Drake, etc. to prepare this income tax return. You may also handwrite the return, but make sure your writing is clear. If I can't read it, you will not receive points. Partial credit will be given on this assignment.
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Appendix E Practice Set Assignments-Comprehensive Tax Return Problems E-15 You must determine whether a Schedule M-3 is to be prepared. Cotton's accounting firm and the corporate books and records provide the following addi- tional information. Distributions to shareholders Accumulated adjustments account (AAA), beginning balance $1,890,000 (831,400) • Salaries and wages include $1.2 million of deferred compensation. ' Of the bad debt expense, $230,000 is not deductible this year. • Of other expenses, $3,700 is permanently not deductible. Using the preceding information, prepare a complete Form l 120S and a Sched- ule K-1 for Max Martin, 1824 Church Street, Concord, NC 28025. If any informa- tion is missing, make realistic assumptions. James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that the Obama administration has proposed lowering the Fed- eral gift tax exclusion from $5.25 million to $3 million. Although this change may not occur, the Polks feel they should take advantage of the more generous exclu- sion available under existing law. Thus, in 2013, the Polks make transfers of many of their high value investments. These and other gifts made during 2013 are sum- marized below. Asset Transfer Condominium located in Conroe (TX) acquired in 1999, cost $1.2 million, to Benjamin, Michael, and Olivia as equal tenants in common. Office building, located in Round Rock (TX) built in 2001, cost $1.8 million, to Benjamin, Michael, and Olivia as equal tenants in common. Vacation ranch in Bandera (TX) inherited by James from his father in 1996, value then $900,000, to Benjamin, Michael, and Olivia as equal joint tenants with right of survivorship. Ella used her separate property to reimburse her father (Alan Roberts) for his heart bypass operation. Paid for daughter's (Olivia's) wedding to John Turner James used his separate property to purchase a new automobile (BMW) as a graduation present (from medical school) for his favorite niece (Carol Polk) Donor James Ella $1,800,000 $1,800,000 2,200,000 2,200,000 2,400,000 -0- -0- 82,000 20,000 20,000 42,000 -0- Prepare 2013 gift tax returns (Form 709) for both of the Polks. A§ 2513 election to split gifts is made. The Polks have made no taxable gifts in prior years. Relevant Social Security numbers are 123-45-6789 (James) and 123-45-6788 (Ella). 8-ESTATE TAX (FORM 706) Harriet C. Harper, age 74, died as a result of an automobile accident on June 6, 2013. At the time of her death, Harriet lived' at 1520 Marlin Drive, Clearwater, FL 33758. She was predeceased by her husband, John W. Harper, who died in 2001.
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Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return OMB No. 1545-0020 Information about Form 709 and its separate instructions is at www.irs.gov/form709. Department of the Treasury Internal Revenue Service (For gifts made during calendar year 2013) See instructions. 1 Donor's first name and middle initial 2 Donor's last name 3 Donor's social security number JAMES A. POLK 123-45-6789 4 Address (number, street, and apartment number) 5 Legal residence (domicile) 13319 Taylorcrest Street USA 6 City, state, and ZIP or postal code 7 Citizenship (see instructions) Houston, TX 77079 Foreign country name Foreign province/state/county Foreign postal code USA 8 If the donor died during the year, check here and enter date of death . Yes No 9 If you extended the time to file this Form 709, check here 10 Enter the total number of donees listed on Schedule A. Count each person only once. 5 11 a Have you (the donor) previously filed a Form 709 (or 709-A) for any other year? If "No," skip line 11b . . . . . . . . . . . X b Has your address changed since you last filed Form 709 (or 709-A)? . . . . . . . . . . . . . . . . . . . . . . . . 12 Gifts by husband or wife to third parties. Do you consent to have the gifts (including generation-skipping transfers) made by you and by your spouse to third parties during the calendar year considered as made one-half by each of you? (see instructions.) (If the answer is "Yes," the following information must be furnished and your spouse must sign the consent shown below. If the answer is "No," skip lines 13–18.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . X 13 Name of consenting spouse ELLA R. POLK 14 SSN 123-45-6788 15 Were you married to one another during the entire calendar year? (see instructions) . . . . . . . . . . . . . . . . . . X 16 If 15 is "No," check whether married divorced or widowed/deceased, and give date (see instructions) 17 Will a gift tax return for this year be filed by your spouse? (If "Yes," mail both returns in the same envelope.) . . . . . . . . X 18 Consent of Spouse. I consent to have the gifts (and generation-skipping transfers) made by me and by my spouse to third parties during the calendar year considered as made one-half by each of us. We are both aware of the joint and several liability for tax created by the execution of this consent. Consenting spouse's signature Date 19 Have you applied a DSUE amount received from a predeceased spouse to a gift or gifts reported on this or a previous Form 709? If "Yes," complete Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Enter the amount from Schedule A, Part 4, line 11 . . . . . . . . . . . . . . . . . . . 1 5,192,000 2 Enter the amount from Schedule B, line 3 . . . . . . . . . . . . . . . . . . . . . . 2 3 Total taxable gifts. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . 3 5,192,000 4 Tax computed on amount on line 3 (see Table for Computing Gift Tax in instructions) . . . . . 4 2,022,600 5 Tax computed on amount on line 2 (see Table for Computing Gift Tax in instructions) . . . . . 5 6 Balance. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . 6 2,022,600 7 Applicable credit amount. If donor has DSUE amount from predeceased spouse(s), enter amount from Schedule C, line 4; otherwise, see instructions . . . . . . . . . . . . . 7 2,045,800 8 Enter the applicable credit against tax allowable for all prior periods (from Sch. B, line 1, col. C) . 8 9 Balance. Subtract line 8 from line 7. Do not enter less than zero . . . . . . . . . . . . . . 9 2,045,800 10 Enter 20% (.20) of the amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977 (see instructions) . . . . . . . . . . . . . . . . . . 10 11 Balance. Subtract line 10 from line 9. Do not enter less than zero 11 2,045,800 12 Applicable credit. Enter the smaller of line 6 or line 11 . . . . . . . . . . . . . . . . . . 12 2,022,600 13 Credit for foreign gift taxes (see instructions) . . . . . . . . . . . . . . . . . . . . . 13 14 Total credits. Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2,022,600 15 Balance. Subtract line 14 from line 6. Do not enter less than zero . . . . . . . . . . . . . 15 0 16 Generation-skipping transfer taxes (from Schedule D, Part 3, col. H, Total) . . . . . . . . . 16 17 Total tax. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 0 18 Gift and generation-skipping transfer taxes prepaid with extension of time to file . . . . . . . 18 19 If line 18 is less than line 17, enter balance due (see instructions) . . . . . . . . . . . . . 19 0 20 If line 18 is greater than line 17, enter amount to be refunded . . . . . . . . . . . . . . 20 0 Under penalties of perjury, I declare that I have examined this return, including any accompanying schedules and statements, and to the best of my Sign Here knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than donor) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below (see instructions)? Yes No Signature of donor Date Paid Preparer Use Only Print/Type preparer's name Preparer's signature Date Check if PTIN self-employed Firm's name Firm's EIN Firm's address Phone no. For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see the instructions for this form. Form 709 (2013) HTA
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Form 709 (2013) JAMES A. POLK 123-45-6789 Page 2 SCHEDULE A Computation of Taxable Gifts (Including transfers in trust) (see instructions) A Does the value of any item listed on Schedule A reflect any valuation discount? If "Yes," attach explanation. . . . . . . Yes No B Check here if you elect under section 529(c)(2)(B) to treat any transfers made this year to a qualified tuition program as made ratably over a 5-year period beginning this year. See instructions. Attach explanation. Part 1—Gifts Subject Only to Gift Tax. Gifts less political organization, medical, and educational exclusions. (see instructions) A Item number B G For split gifts, enter ½ of column F H Net transfer (subtract col. G from col. F) Donee's name and address Relationship to donor (if any) Description of gift If the gift was of securities, give CUSIP no. If closely held entity, give EIN C D E F Donor's adjusted Date Value at basis of gift of gift date of gift 1 Benjamin, Michael, and Olivia Polk; Childr 1,200,000 2013 1,800,000 900,000 900,000 2 Benjamin, Michael, and Olivia Polk; Childr 1,800,000 2013 2,200,000 1,100,000 1,100,000 3 Benjamin, Michael, and Olivia Polk; Childr 900,000 2013 2,400,000 1,200,000 1,200,000 4 Carol Polk; Niece; BMW 42,000 2013 42,000 21,000 21,000 Gifts made by spouse— complete only if you are splitting gifts with your spouse and he/she also made gifts. 1 Benjamin, Michael, and Olivia Polk; Childr 1,200,000 2013 1,800,000 900,000 900,000 2 Benjamin, Michael, and Olivia Polk; Childr 1,800,000 2013 2,200,000 1,100,000 1,100,000 3 Alan Roberts; Father; Reimbursement 42,000 2013 82,000 41,000 41,000 Total of Part 1. Add amounts from Part 1, column H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,262,000 Part 2—Direct Skips. Gifts that are direct skips and are subject to both gift tax and generation-skipping transfer tax. You must list the gifts in chronological order. A Item number B G For split gifts, enter ½ of column F H Net transfer (subtract col. G from col. F) Donee's name and address Relationship to donor (if any) Description of gift If the gift was of securities, give CUSIP no. If closely held entity, give EIN C D E F 2632(b) election out Donor's adjusted Date Value at basis of gift of gift date of gift 1 0 0 Gifts made by spouse— complete only if you are splitting gifts with your spouse and he/she also made gifts. Total of Part 2. Add amounts from Part 2, column H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 Part 3—Indirect Skips. Gifts to trusts that are currently subject to gift tax and may later be subject to generation-skipping transfer tax. You must list these gifts in chronological order. A Item number B G For split gifts, enter ½ of column F H Net transfer (subtract col. G from col. F) Donee's name and address Relationship to donor (if any) Description of gift If the gift was of securities, give CUSIP no. If closely held entity, give EIN C D E F 2632(c) Donor's adjusted Date Value at election basis of gift of gift date of gift 1 0 0 Gifts made by spouse— complete only if you are splitting gifts with your spouse and he/she also made gifts. Total of Part 3. Add amounts from Part 3, column H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (If more space is needed, attach additional statements.) Form 709 (2013)
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BUSINESS.TAX..docx

Employment Ksh. P.a. Salary 805,000 Bonus 265,000 Employer Contribution to pension
approved
Employer contribution to pension
unapproved 68,000 Life insurance premium
House servant – higher of
(i)...

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