ACCT 320 Lecture : pelvis-anatomy-notes

George Large (SSN 000-11-1111) and his wife Marge Large (SNN000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 andwant you to prepare their 2012 income tax return based on theinformation below: George Large worked as a salesman for Toyboat,Inc. He recieved a salary of $80,000 ($8,500 of federal incometaxes withheld and $1,800 of state income taxes withheld) plus anexpense reimbrsement from Toyboat of $5,000 to cover his employeebusiness expenses. George must make an adequate accounting to hisemployer and return any excess reimbursement, none of thereimbirsement was related to the meals and entertainment.Additionally, Toyboat provides George with medical insruance worth$7,200 per year. George drove his car a total of 24,000 milesduring the yeear, and he placed the car in service on June 1, 2010.His log indicates that 18,000 miles were for sales calls tocustomers at the customers' offices and the remainder was personalmileage. George uses the standard mileage rate method. Assume hisbusiness miles were driven evenly during the year. George is acollege basketball fan. He purchased two season tickets for a totalof $4,000. He tales a costomer to every game, and they discuss somebusiness before, during, adn after the games. George also takes tobusiness lunches. His log indicates that he spent $1,500 on thesebusiness meals. George also took a five-day trip to the Toyboatheadquarters in Musty, Ohio. He was so well-prepared that hefinished his business in three days, so he sent the other two dayssighseeing. He had the following expenses during each of the fvedays of his trip: Airfare $2,00 Lodging $85/day Meals $50/dayTaxicabs $20/day Marge Large is self-employed. She repairs rubbertoy boats in the basement of their home, which is 25% of thehouse's square footage. The business code is 811490. She had thefollowing income and expenses: Income from rubber toyboat repais$15,000 Cost of supplies $5,000 Contract labor $3,500 Long distancephone calls (business) $500 The Large's home cost a total of$150,000, of which the cost of the land was $20,000. The FMV of thehouse is $225,000. The house is depreciable over a 39-year recoveryperiod. The Larges incurred the following total other expenses:Utility Bill of the House $2,000 Real State Taxes $2,500 MortgateInterest $4,500 Cash charitable contributions $3,500

Prepare form 1040, schedules A,C and SE for 1040, and form 2106,8829. For the year 2015.

(Assume no depreciation for this problem and that no estimatestaxes were paid by the Larges)

Use the tax formula as a structure for your answer. You need notuse a tax return form.As a suggestion, you should break thisproblem into small parts, solve each part, do what you know, andcome back to what you do not.

George Large (SSN 000-11-1111) and his wife Marge Large (SNN000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 andwant you to prepare their 2012 income tax return based on theinformation below:

George Large worked as a salesman for Toyboat, Inc. He recieveda salary of $80,000 ($8,500 of federal income taxes withheld and$1,800 of state income taxes withheld) plus an expense reimbrsementfrom Toyboat of $5,000 to cover his employee business expenses.George must make an adequate accounting to his employer and returnany excess reimbursement, none of the reimbirsement was related tothe meals and entertainment. Additionally, Toyboat provides Georgewith medical insruance worth $7,200 per year. George drove his cara total of 24,000 miles during the yeear, and he placed the car inservice on June 1, 2010. His log indicates that 18,000 miles werefor sales calls to customers at the customers' offices and theremainder was personal mileage. George uses the standard mileagerate method. Assume his business miles were driven evenly duringthe year. George is a college basketball fan. He purchased twoseason tickets for a total of $4,000. He tales a costomer to everygame, and they discuss some business before, during, adn after thegames. George also takes to business lunches. His log indicatesthat he spent $1,500 on these business meals. George also took afive-day trip to the Toyboat headquarters in Musty, Ohio. He was sowell-prepared that he finished his business in three days, so hesent the other two days sighseeing. He had the following expensesduring each of the fve days of his trip:

Airfare $2,00

Lodging $85/day

Meals $50/day

Taxicabs $20/day

Marge Large is self-employed. She repairs rubber toy boats inthe basement of their home, which is 25% of the house's squarefootage. The business code is 811490. She had the following incomeand expenses:

Income from rubber toyboat repais $15,000

Cost of supplies $5,000

Contract labor $3,500

Long distance phone calls (business) $500

The Large's home cost a total of $150,000, of which the cost ofthe land was $20,000. The FMV of the house is $225,000. The houseis depreciable over a 39-year recovery period. The Larges incurredthe following total other expenses:

Utility Bill of the House $2,000

Real State Taxes $2,500

Mortgate Interest $4,500

Cash charitable contributions $3,500

(Assume no depreciation for this problem and that no estimatestaxes were paid by the Larges)

Instructions: Analyze the situation below using the 6-stepapproach to resolving ethical dilemmas on the next page. You shoulddiscuss each step of the approach in a separate paragraph.Therefore your finished paper should be 6 paragraphs long andapproximately 2-3 pages typed in 12-point font and double spaced.Prepare the paper in Word format and submit in the dropbox set upin Western Online by the due date listed there. This assignment isworth 60 pts in total with 50% of points for content and adherenceto the 6-step approach and 50% on grammatical style andpresentation (writing skills).

Jon Williams, CPA, is in the middle of the real-life soap opera,“Taxing Days of Our Lives”

The Cast of Characters:

Oneway Corporation is Jon’s audit and tax client. The threedirectors are the officers and the only three stockholders, eachowning exactly one-third of the shares

President Jack founded the company and is now nearingretirement. As an individual, he is also Jon’s tax client.

Vice President Jill manages the day-to-day operations. She hasbeen instrumental in increasing the business and its profits.Jill’s individual tax work is done by CPA Phil.

Treasurer Bill has been a long-term, loyal employee and has beenresponsible for many innovative financial transactions and reportsof great benefit to the business. He is Jon’s close personal friendand an individual tax client. (Side Note: Another CPA in Jon’saudit firm is the partner assigned to the audit engagement ofOneway Corporation to maintain auditor independence for thisengagement.)

The Request

President Jack discussed with CPA Jon the tax consequences tohim as an individual of selling his one-third interest in OnewayCorporation to Vice President Jill. Later, meeting with Bill todiscuss his individual tax problems, Jon learns that Bill fearsthat Jack and Jill will make a deal, put him in a minorityposition, and force him out of the company. Bill says, “Jon, wehave been friends a long time. Please keep me informed about Jack’splans, even rumors. My interest in Oneway Corporation represents mylife savings and my resources for my kid’s college. Remember,you’re little Otto’s godfather.”

Thinking back, Jon realized that Vice President Jill has alwaysbeen rather hostile. Chances are that Phil would get the Onewayengagement if Jill acquires Jack’s shares and controls thecorporation. Nevertheless, Bill will probably suffer a great dealif he cannot learn about Jack’s plans, and Jon’s unwillingness tokeep him informed will probably ruin their close friendship. Jonponders the problem. “Oneway Corporation is my client, but acorporation is only a “legal entity”. The stockholders personifythe real entity, so they are collectively my clients, and I cantransmit information among them as though they were one person.Right? On the other hand, Jack and Bill engage me for individualtax work, and information about one’s personal affairs is really nobusiness of the other. “What to do? What to do?”

Ethical Model 1. Obtain the relevant facts.

2. Identify the ethical issues from the facts.

3. Determine who is affected by the outcome of the dilemma andhow each person or group is affected.

4. Identify the alternatives available to the person who mustresolve the dilemma.

5. Identify the likely consequence of each alternative.

6. Decide the appropriate action.