Acct 3210 Fall 2013 2nd Tax Return Project

Acct 3210 Fall 2013
§002

2nd Tax Return Project
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Part of the educational objective of this project
is to enhance your understanding of how the different tax forms are related to
each other, and how amounts from one from one part of the form to a different
part of the same form or flow to another form. Therefore, all forms are to be
completed manually. You may not use a computer-based tax compliance software
program in completing this assignment. Each student is required to complete an
original of the tax return forms. Also, you cannot use fillable forms. You
should complete your forms in blue ink or in pencils, something that is clearly
distinguishable from ink or photocopy.

You should turn in
all of your workpapers supporting your conclusions. Such workpapers would
normally include forms that are not required for the return but that you used
in calculating an amount for the return, or copies of research that was done to
determine or support a technical conclusion.

If you make an assumption about a technical
matter, a matter that affects any item on the return or omitted from the
return, you should submit the research you did to support that assumption.

For students working in groups, it is not
important that all students agree with the conclusions of other members. Each
student submits his or her own results.

Students may
consult only with other members of the same group. You may not seek the advice
of individuals outside of your group, meaning that students may also not seek
the advice of anyone outside the class. You can do online research, but you may
not post questions or seek online solutions to questions specific to the facts
of this assignment.

If you elected to work alone and you decide that
you would instead prefer to work in a group, please advise me in advance of all
members of the group. I will respond with a written acknowledgement and
approval. Until you have that acknowledgement and approval, you are not
authorized to work in the group.

All assignments are due at the start of class on
the due date. Because we will be reviewing the solution in class, late
submissions will not be accepted without advance written approval from the
instructor. Such approval will not be granted easily and will be accompanied
by a penalty of 20 points for each calendar day or fraction thereof.

_____________________________________________________________________________________

Acct 3210 Fall 2013
§002

2nd Tax Return Project
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I have read the
requirements on the preceding page, and I affirm that the work I am submitting
is entirely my own work or my work in collaboration only with other members of
my group. Also, even though the attached represents my work or the work of my
group, I affirm that I have not helped any other class member with this
assignment. I understand that any violation of these requirements will be
considered as a violation of the College’s Honesty Policy, and I may receive a
score of zero for this assignment.
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Print Name Signature

Acct 3210 Fall 2013 §002

2nd Tax Return Project
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Please complete the required federal individual income tax return
forms for the following taxpayer.

Unless instructed otherwise, the information
provided is for the taxpayer’s 2012 tax year. Please complete his 2012
tax return. Ignore the requirement to attach the form(s) W-2.

Bob Grant is unmarried and lives in Lexington,
Kentucky. Bob’s wife died in 2009, leaving him with three children Alyssa, now
age 19, Jared, now age 15 and Katherine, now age 12.

·
Bob’s
Social Security number is 987-45-1234
·
Alyssa’s
Social Security number is 412-32-4537

·
Jared’s
Social Security number is 412-32-5690
·
Katherine’s
Social Security number is 412-32-6940
·
The Grants’
mailing address is 95 Hickory Road, Lexington, Kentucky 40502.
·
Jared and
Katherine are tax dependents for federal tax purposes

Alyssa is a full-time student at the University
of Lexington. Bob provided all of her support. During 2012, Bob paid $11,000 in
tuition expenses, $7,300 in Room and Board expenses, and $1,875 for books.

Bob Grant received the following wages during the year:

Gross Wages

Federal Income Tax

State Income Tax

Employer

(salary and bonus)

Withholding

Withholding

National Storage

$166,200

$33,979

$8,750

All applicable and appropriate payroll taxes were withheld by Bob’s
employer.

Bob has an online business that he conducts,
mostly on week-ends. The following receipts and expenditures are from that
online business:

Gross Receipts

$25,000

Cost of Merchandise Sold

10,000

Operating Expenses:

·

Advertising

$1,450

·

Insurance-Professional

$750

· Travel
& lodging while out of town at shows

$2,200

· Meals
while out of town

$475

·

Supplies

$800

· Legal
and professional fees

$550

Ignore considerations of depreciation/cost recovery, home office
expenses or inventories

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Acct 3210 Fall 2013 §002

2nd Tax Return Project
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In addition to his wages and his online business, Bob also received
the following income during the year:

Dividend income, including $3,500 of Qualified
Dividends,

$3,975

Interest Income from First Kentucky Bank

$130

Interest Income from City of Lexington, KY Bond
(Private activity bonds)

$900

Interest Income from U.S. Treasury Bond

$675

Interest Income from Nevada State School Board
Bond

$150

During the
year, Bob settled a lawsuit related to an auto accident in an earlier year. He
received the following payments:

Unreimbursed
Medical Expenses:

Bob was not able
to deduct these because of the % of AGI threshold.

$2,500

Emotional
Distress

$12,000

Punitive Damages

$10,000

Total receipts

$24,500

Bob purchased an annuity 8 years ago and began
receiving payments this year. The cost of the annuity contract was $88,000. It
will pay him $15,000 per year for ten years (beginning with this year). The
$15,000 payment was reported to Bob on a form 1099-R (box 7 contained an entry
of “7” on the form).

Bob Grant paid or incurred the following expenses (payment was during
2012 unless noted otherwise):

Dentist/Orthodontist (unreimbursed by
insurance)

$8,500

Doctors (unreimbursed by insurance)

$ 625

Prescriptions (unreimbursed by insurance)

$ 380

KY state tax payment made on 4/15/12 for 2011
liability

$1,200

KY state tax payment made on 4/15/13 for 2012
liability

$1,600

Real property taxes on residence

$5,800

Vehicle property tax based upon age of vehicle

$250

Mortgage interest on principal residence

$8,560

Home equity loan interest. The principal amount
of the loan is $125,000.

None of the proceeds were applied to acquire or
substantially improve the

home or for business or investment. The loan
amount is less than the

excess of the market value of the home over the
acquisition indebtedness.

$7,500

Interest paid on funds borrowed to purchase the
City of Lexington, KY

municipal bonds

$400

Interest paid on funds borrowed to purchase
U.S. Treasury bonds

$240

Cash contribution to the Red Cross

$1,000

Contributions to Senator Rick Hartley’s
Re-election Campaign

$1,200

Cash Contributions to First Baptist Church of
Kentucky

$6,000

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Acct 3210 Fall 2013 §002

2nd Tax Return Project
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In addition, Bob drove 6,750 miles commuting to
work at National Storage. Bob has represented to you that he maintained careful
logs to support the mileage.

In April, Bob drove a total of 465 miles to receive medical treatment
for Jared at a hospital.

The Grants’ personal residence was burglarized on
October 1, 2012. The theft occurred during the day while Bob was at work and
the children were at school. None of the stolen property was related to Bob’s
online business. The following personal property was stolen:

Fair Value

Tax Basis of

Insurance

Purchase

on Date of

Reimbursement

Item

Item

Date

Theft

Received

Laptop computer and Printer

09/01/2012

3,000

3,000

500

Rifle

03/01/2010

2,000

2,500

500

TV/Projector

03/01/2010

5,000

13,000

1,000

2005 Honda Pilot

07/01/2011

4,000

6,500

500

Bob Grant
has a $4,500 short term capital loss carryover coming into the 2012 tax year.
During 2012, he had the following Securities Transactions:
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Description

Date

Acquired

Date Sold

Adjusted Basis

Net Proceeds

100 shares Stock ABC Corp

7/31/2007

6/28/2012

$10,200

$24,700

150 shares Stock GHI Corp

7/8/2011

6/28/2012

12,000

11,100

$5,000 Bonds issued by ZYX Corp., *

6/22/2010

3/15/2012*

4,350

5,000

200 Shares Stock MNO Corp

3/16/2012

7/31/2012

15,000

12,500

300 Shares Stock MNO Corp

8/24/2012

N/A

13,000

N/A

* The ZYX Corp bonds were purchased in the
secondary market. Par is $1,000; they were purchased for $870 per thousand.
They were due and were redeemed on March 15, 2012
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Bob wants to contribute to the Presidential
Election Campaign. He would like to receive a refund (if any) of any tax he may
have overpaid for the year. His preferred method of receiving the refund is by
check.

Bob did not own, control or manage any foreign
bank accounts nor was he a grantor or beneficiary of a foreign trust during the
tax year.

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