In United States v. Windsor (570 U.S.___, 133 S. Ct. 2675(2013)), the United States Supreme Court held that Section 3 of theDefense of Marriage Act is unconstitutional because it violates theequal protection principles of the Constitution. As a result ofthis ruling, the IRS issued Revenue Ruling 2013-17, whichrecognizes same-sex marriages for Federal tax purposes if theindividuals are lawfully married under state law. As a generalrule, the IRS will recognize a marriage of same-sex individualsthat was validly entered into in a state whose laws authorize themarriage of two individuals of the same sex even if the marriedcouple is domiciled in a state that does not recognize the validityof same-sex marriages. (Rev. Rul 2013-17) This ruling appliesprospectively as of September 16, 2013. In addition, the ruling maybe relied upon in filing amended tax returns for any open year.Assume it is March 2014 and you are a senior associate at Ernest,Frank, and George, CPAs. Your clients are Andrew Bond and CharlesDavis. They were lawfully married in Massachusetts in 2006. Theyreside in Orlando, FL a state with no individual income tax. Theyhave provided you with their Federal tax returns for 2010, 2011,and 2012 (provided in a separate file), which were timely filedusing the Single filing status. They would like to know if theyshould amend their tax returns for these years using the MarriedFiling Joint status. Additionally, they want to know which filingstatus they should use for 2013, Married Filing Joint or MarriedFiling Separate. Andrew and Charles have provided the followingadditional information: 2010 Andrew worked full time as anengineer. Charles had an unpaid internship during the springsemester. He took graduate courses during the summer session andstarted working as the activities director in the fall. 2011 Andrewworked full time. Charles worked full time. 2012 Andrew workedduring the first few months of the year, but then took a sabbaticalto take care of his sick mother. Charles worked full time. Neithermade any charitable contributions. 2013 Andrew worked full time.Charles worked full time. Neither made any charitablecontributions. Your manager, Harry Idleman, has asked you toprepare an analysis of the tax situation for Andrew and Charles.Specifically: Should they amend their 2010 tax returns? Should theyamend their 2011 tax returns? Should they amend their 2012 taxreturns? What filing status should they use to file their 2013 taxreturns? To allow you to focus on the analysis, Harry asked a staffmember to prepare mock Married Filing Joint tax returns for 2010 â2012 (provided in a separate file). For 2013, the staff memberprepared proforma tax returns using the Married Filing Joint andMarried Filing Separate filing statuses. Deliverable: Pleaseprovide a memo to the file with your recommendations and supportingcalculations regarding the decision to amend prior year returns andthe appropriate filing status to use for the 2013 tax return. Harryalso asked you to prepare a memo documenting several topicsillustrated by this case. Several deductions and credits wereaffected by the choice of filing status and AGI levels when the taxreturns were combined. Please document the impact of filing statusand AGI on phase-outs for each year, e.g. in 2010, Andrewâs AGI istoo high to claim the deduction for student loan interest whenfiling Single. The memo should also include your findings about themarriage tax penalty, when it is likely to exist, and how this caseexemplifies this issue. Please provide a memo to the filedocumenting the impact of filing status and AGI on phase-outs and abrief discussion of the marriage tax penalty. Deliverable: Memo tothe file regarding the impact of filing status and AGI onphase-outs and the impact of the marriage tax penalty.Additionally, Andrew and Charles would like to know if Andrewshould itemize his deductions for 2013 if they file Married FilingSeparate. They would also like to know if there are any tax ornon-tax issues, other than refund status, they should considerbefore amending their tax returns. Please prepare a letter to theclient regarding the results of your analysis as well as addressingthese issues. Deliverable: Client letter discussing which, if any,returns to amend, your filing status recommendation for 2013, ifthey should itemize their deductions for 2013, and any other issuesthey should consider before amending returns and selecting a filingstatus.

Coastline CommunityCollege

Acct C103, IndividualTaxation

Summer 2018

Tax Year 2017 Form 1040Tax Return Project

Based upon Bill and Susan Minorâsinformation below, complete a Form 1040 for Tax Year 2017.

You will receive 10 points foreach correct figure you list on Lines 7, 8a, 12, 21, 37, 40, 42,43, 63, and 64.Email your completed Form 1040 to me by August 15,2018.

-In 2017, Bill and Susan Minor hadW-2 Wages totaling $99,000, Federal Tax Withheld of $9,000, andState Tax Withheld of $4,000.

-In 2017, Bill and Susan both hadhealth insurance for the entire year through their employers whichmet the Minimum Essential Coverage requirements under theAffordable Care Act.

-Bill is an auditor at a hotel andSusan is a high school business teacher.

-Bill and Susan will file MarriedFiling Joint in 2017.

-In 2017, Bill received interestincome of $250 from his 1^st Bank of the Third BestAccount.He also cashed in a Certificate of Deposit early and thebank assessed a $25 penalty for early withdrawal of savings.

-In 2017, Bill and Susan spent $3,700making repairs on their home.The repairs included work on theirgarage door, replacement of the kitchen flooring, and refurbishingtheir electrical breaker box.

-The Minorâs took the StandardDeduction on their Form 1040 Tax Return in 2016.They donât know ifthey can take the Standard Deduction or not in 2017.They want totake the largest deduction they can in 2017, whether that be theStandard Deduction OR the Itemized Deduction.

-In 2017, Susan received a $6,000inheritance from the estate of her great-great-grandmother.

-Susan and Bill are both 50 years oldand neither one is blind or disabled.

-Their grown children are Porsche andCarmen.The kids are out of the house and have their own jobs andapartments.Porsche, who made $96,000 in 2017, is a poor moneymanager and Bill gave her $3,800 in 2017.

-In 2017, Susan sent her Mom $1,500to help her Mom buy medication and medical devices.Susan does notand cannot claim her Mom as a Dependency Exemption.

-The Minorâs took fencing lessons in2017 that cost $2,400.They said these lessons help them âunwindâafter a busy workday. Susan liked fencing so much she bought afoil, epee, and saber costing $2,200.A day after buying the fencingequipment, a thief broke into Susanâs fencing locker at the fencingcenter and stole the foil and saber worth $1,800.Susan filed apolice report, had no insurance on the foil and saber, and theproperty was not recovered.

-In 2017, Susan paid $850 in uniondues to the El Camino Real Teachers, Educators, and MentorsUnion.

-Bill owed the IRS $4,600 from his2015 Federal Income Tax Return.He is paying $212 amonth on this debt.In 2017, Bill calculated he paid $2,344 in taxand $200 in interest to the IRS.

-Susan helped her friend start abusiness.The friend plans on paying Susan $4,950 for all thework

she did.This payment will be made inDecember 2018.

-Susan decided in 2017 to become aself-employed tutor/teacher.She taught 2 kids business planningand

was paid $400.Her ONLY businessexpenses as a self-employed tutor/teacher were $50 for businesscards and $75 for paper, pencils, and supplies.Susan also tells youshe paid âMystic Maria the Worldâs 7^th Bestand Inexpensive Fortune Tellerâ $540 to predict Susanâssuccess.Maria reported that Susan would be wildly successful in hertutoring/teaching business and would gross approximately $500 in2018.

-In 2017, Bill and Susan owned arental property and calculated Total Rental Real Estate Income onLine 26, Schedule E, of $6,820.

-In 2017, Bill won a $470 cash prizefor a contest he entered.Bill said he did NOT get a W-2 or a Form1099 for the $470 he won.

-The Minorâs received a State TaxRefund of $630 in April 2017 from the State of California.Thisrefund was for Tax Year 2016.

-Bill stated he contributed $2,000 tohis Roth IRA in 2017.

-Bill and Susan are members of theirlocal Elks Lodge, which is a non-profit organization, involved incharitable work, and a Qualifying Charitable Organization.TheMinorâs pay $140 a year for dues and their only activity with theElks is going to eat Sunday breakfast, attending dances, and buyingdrinks at the bar.

-The Minorâs paid $9,850 in HomeMortgage Interest in 2017.They paid a property tax bill of $3,700in 2017.

-In 2017, Bill drove his personal auto 3,900 miles as avolunteer meal deliverer for Letâs Feed All of the Hungry, aQualifying Charitable Organization.

-In 2017, Bill donated 150 hours of time to Goodwill, aQualifying Charitable Organization. He figures his time is worth$40 an hour.

-Susan has AB- blood type. When the Red Cross Bloodmobile stopsby her work, Susan donated blood. In 2017, she donated 6 pints ofblood. The local hospital charges $300 a pint for patients whoreceive AB- Blood.

-In 2017, Bill incurred $2,900 in gambling losses at Lost WagesCasino. In 2017, he won $4,100 in the California Super BigLotto.

-Bill and Susan calculated they had 6,000 commuting miles totheir W-2 jobs in 2017.

-The Minorâs donated $1,600 to Letâs Feed the Whales and Savethe Children Fund in 2017. Billâs friend Dante said the fund was isa scam. Bill went on the IRS Website and found that the fund was aQualifying Charitable Organization.

- In 2017, Susan sold stock she had in The Coffee Grind Company.Susanâs friend, Alma Cabrera, an Enrolled Agent, and calculatedthat Susan had a Short-Term Capital Gain of $5,300 from the sale ofthe stock.

-In 2017, Susan decided to run for the city council. She paid a$255 filing fee and borrowed $15,000 from the local bank to financeher campaign. Susan lost the election.

-In 2017, Bill and Susan paid homeownerâs association dues of$1,400 on their personal residence.

-In 2017, Bill paid a dental bill of $7,500 for removal of 16 ofhis bad teeth and the filling of 16 of his other teeth.

In 2017, Bill paid $580 for DMV registration fees for his 2002Chevy S-10 Pickup Truck and Susanâs 2007 Yaris. Bill has determinedthese DMV fees are deductible on a Schedule A.

In 2017, Susanâs sister, who is a well-known, successful, andhighly paid entertainer, gave Susan a Tesla Model S Automobile witha Fair Market Value of $80,000. Susan uses the car to commute toher job and paid $900 in DMV registration fees that she hasdetermined are deductible on a Schedule A.

In 2017, Bill was ticketed for driving his car without a validregistration and no proof of insurance. He paid a fine of $350,which included court costs.

-In 2017, Susan found a gold and diamond ring near hear house.She turned it into the police department and after 30 days, thepolice gave the property back to Susan since no one claimed it. InNovember 2017, Susan had the ring appraised and found out the fairmarket value of this found property was $6,200.

-In 2017, Susan paid a researcher $300 to trace her familyhistory. The researcher reported to Susan she may be the rightfulowner of a small farm in Germany worth $1,000,000. Susan has madeplans to see if she owns the land, she has set aside $2,500 in asavings account for a title and legal search, and she will hire anattorney in December 2018 to determine her ownership rights.

skyfish311

Weekly leaderboard

Home

Homework Help 3,900,000

Accounting 580,000