Accounting 2205 Stanton Tax Return Project

Accounting 2205Stanton Tax Return ProjectAlan (45) and Julie (42) Stanton are married with 2 children (Jennifer K. and Jason D.) who qualify as their dependents. Jennifer was age 20 and Jason was age 12 at the end of 2013. Jennifer is a full-time student at Local University; she lives at home and commutes to school. The Stanton family lives at 1501 Maple St. in Wheaton, IL 60187. Alan works as a project manager and Julie is self-employed. They do not wish to contribute to the presidential election campaign fund. Relevant social security numbers are:Alan: 342-55-6897Julie: 389-14-5239Jennifer: 378-66-8985Jason: 320-21-7551Alan and Julie had the following items for 2013:• Alan’s salary: $135,800 (XYZ Electric Co.; West Chicago, IL; FEIN : 36-1723493)• Interest from First State Bank of $7,350• Dividends of $10,780 as follows: (All dividends are qualified dividends)o PepsiCo dividend of 5,900o GM dividend of 3,780o AT & T dividend of $1,100• Non-business bad debt due to a loan to a friend of $4,500. Alan loaned the money to his friend on June 1, 2008. He discovered that his friend declared bankruptcy on September 8, 2013.• Stock from Bolling Drill Corporation was sold on June 1, 2013 for $110,000. The stock was acquired on September 1, 2010 for $149,000. This stock qualifies as Section 1244 stock.• On November 10, 2013, they sold 1,000 shares of Dotcom stock for $925. They had purchased the Dotcom stock the previous year on October 2 for $4,900. On September 12, 2013, they sold 800 shares of Microserf stock for $3,800. They had purchased the Microserf stock on April 22, 2010, for $3,050. The proceeds from these sales were reported on the Form 1099-B they received from their broker but basis was not reported.• The rental apartment building they own located at 1140 Farnsworth Avenue in Aurora generates the following income and expenses:o Rental income of $60,000o Rental expenses excluding depreciation as follows:? Property insurance $8,000? Repairs and maintenance $9,500? Property taxes $12,700? Utilities $8,800o The apartment building was purchased in June of 2009 for $600,000. The cost of the land is estimated at 20 % of the total value.o Furniture and fixtures for the apartment building purchased in March of 2010 for $40,000• The Stanton’s personal use ski boat was destroyed in a boating accident on August 10, 2013. The boat cost $20,000 when the Stanton’s purchased it on May 19, 2009 and had a fair market value of $15,500 at the time of the accident. This loss is not covered by insurance.• Julie is a freelance writer and she calls her business Writers’ Anonymous. Julie is a cash basis taxpayer. Her business office is located at 120 N. Main St., Wheaton, IL 60187• Julie had the following income and expense items associated with her business:o Income from sale of articles: $202,800o Rent on her office space: $20,900o Office utilities: $9,300o Office supplies: $4,450o Liability insurance for her business: $9,880o Business travel (including meals of $2,700): $8,000o Julie purchased and placed in service the following new fixed assets for her business:? Office Furniture and fixtures costing $85,000 on January 10, 2013? Computer equipment costing $40,000 on March 28, 2013? Automobile (2013 BMW) costing $48,000 on January 5, 2013. Total business mileage for the year was 7,000 (60% for business use). Total mileage for the year was 11,667. Julie will use the actual cost method for the auto. She will not elect Section 179 for the auto. Additional expenses of operating the car are as follows:• Gasoline: $2,650• Repairs and Maintenance: $870• Comprehensive insurance coverage premiums: $960• Alan and Julie would like to maximize all potential deductions as soon as possible.• Julie contributed $2,000 to a traditional individual retirement account on March 18, 2014. This is the first time she has contributed to an IRA.• Alan and Julie paid $8,000 for Jennifer’s tuition and $750 for books while she attended Local University where she is a sophomore.• They also paid the following during the year:o State income taxes (which are greater than the sales tax paid): $4,450o Home mortgage interest at Chase Bank, reported on Form 1098: $13,270.o Property taxes on home: $9,930o Charitable contributions in cash: $4,460o Fees for preparing last year’s tax return of $220 were paid in April of 2013o Safe deposit box rental : $50 (for storage of investment documents)• Federal income tax withheld $18,100Required:1. Prepare a spreadsheet computing federal income tax payable (or refund due) for the Stanton’s for 2013. Use all the current rates and tax law effective for the 2013 tax year. Show all your work neatly and completely for maximum potential credit.2. Prepare the 2013 tax return for Alan and Julie Stanton. Required forms are:a. Form 1040b. Schedule A, Form 1040c. Schedule B, Form 1040d. Schedule C, Form 1040e. Schedule D, Form 1040f. Schedule E, Form 1040g. Schedule SE, Form 1040h. Form 4562-Depreciation and Amortization (2 required)i. Form 4684-Casualties and Theftsj. Form 4797-Sale of Business Propertyk. Form 8582-Passive Activity Loss Limitationsl. Form 8863-Education Creditsm. Form 8949-Sales and Other Dispositions of Capital Assets