ACCT130 – Portfolio Project 7 Problem 1 Carl Baker is a 63-year-old widower. He had income for 202X as follows: · Pension from former employee $39850 · Interest income from Bean Bank $5500 · Interest...

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ACCT130 – Portfolio Project        7
Problem 1
Carl Baker is a 63-year-old widower. He had income for 202X as follows:
· Pension from former employee $39850
· Interest income from Bean Bank $5500
· Interest income on City of Bean bonds $4500
· Dividends received from Costco stock held for over one year.  $2000
· Social security benefits $14000
· Rent income on house $9000
· Collections on annuity contract he purchased from Good Intentions Insurance: $5400
The cost of the annuity was $46800 and Carl was expected to receive a total of 260 monthly payments of $450. Carl has received 22 payments so far through 202X
Carl’s daughter, Sasha (who is 40 years old), bo
owed $60k from Carl on January 5th, 202X and used the proceeds to form a new business. He does not charge Sasha interest because she couldn’t afford it. However, he does expect to collect the principal eventually. Sasha is living with Carl until the business becomes profitable. Except for housing, Sasha provides her own support from her business and $1600 in dividends on stocks she received/inherited from her mother.
Other relevant information on the rental home:
· Utilities = $2800
· Maintenance costs - $1000
· Depreciation = $2000
· Real estate taxes = $750
· Insurance = $700
· State income taxes paid = $3500
· County personal property taxes paid = $2100
· Payments on estimated 2017 FIT = $5900
· Charitable contributions of cash to Bean Church = $7400
· Federal interest rate 6%
· Sales taxes paid = $912
Required: Determine Carl’s Federal tax for XXXXXXXXXXThis assignment will give you an opportunity to complete a cu
ent Form 1040 (U.S. Individual Income Tax Return), using the information below. Please use the fillable PDF form located here https:
www.irs.gov/pu
irs-pdf/f1040.pdf. Complete the form using the information provided in the scenario below, save it to your computer, and then upload to the dropbox in Blackboard.
Problem 2
· Due by the end of Week 6 at 11:59 pm, ET.
Mike Smith is 40 years old and is ma
ied to May Smith, and both are clients of ABC Tax Firm that have come to you to file their Federal taxes. The Smiths live at 550 Beacon Road, Neverland, VA XXXXXXXXXXThe couple files a joint return and have two dependent kids, Cheryl, age 17, and Judge, age 18. In 202X, Mike and his wife had the following transactions:
· Mike received $120k in salary from Blue Metal Corporation, where he is an Engineer. Withholding for Federal income tax was $10750. The amounts withheld for FICA were: $7049 for Social Security and $1,740 for Medicare. Mike worked in Mexico from January 1st, 20XX, until Fe
uary 20th of the following year. His $120k salary for 202X includes $18k he earned for January and one-half of Fe
uary 202X while in Mexico.
· Mike and May received $400 interest from Martin Country school bonds.
· Mike received $2300 interest from a Cari
ean bank account.
· May received 50 shares of Bluebell Corporation common stock as a stock dividend. The shares had a fair-market value of $2500 at the time May received them, and she did not have the option of receiving cash.
· Mike and May received a $1200 refund on their prior year’s Virginia income taxes. Their itemized deductions in that year totaled $14k.
· Mike paid $6600 alimony to his ex, Pearl S. Moss. The divorce was finalized 3 years ago.
· Mike and May kept the receipts for their sales taxes paid of $1100.
· Mike and May’s itemized deductions were as follows:
· State income tax paid /withheld = $5100.
· Real estate taxes on their main residence were $3700.
· Mortgage interest on their principal residence was $2500.
· Cash contributions to their church totaled $2800.
Required: Determine Smith’s federal tax. This assignment will give you an opportunity to complete a cu
ent Form 1040 (U.S. Individual Income Tax Return), using the information below. Please use the fillable PDF form located here https:
www.irs.gov/pu
irs-pdf/f1040.pdf. Complete the form using the information provided in the scenario, save it to your computer, and then upload to the dropbox in Blackboard. Make realistic assumptions about any missing data, such as the Social Security numbers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Answered 2 days AfterApr 12, 2022

Solution

Tanmoy answered on Apr 14 2022
11 Votes
ACCT130 – Portfolio Project         4
ACCT130 – PORTFOLIO PROJECT
Table of Contents
Problem 1    3
Problem 2    8
References    12
Problem 1
    Gross Income
     
     
     
     
    Pension
    $39,850
     
     
     
    Interest Income
    $5,500
     
     
     
    Dividend Income
    $2,000
     
     
     
    Annuity Income 
    $3,240
     
     
     
    Social Security Benefits
    $11,900
     
     
     
    Imputed interest on gift loan 
    $1,600
     
     
     
    Net Rental Income 
    $1,750
     
     
     
    Gross Income
     
    $65,840
     
     
    Deduction for AGI
     
    $0
     
     
    AGI
     
     
    $65,840
     
    Less: Personal exemption deduction
    -$3,950
     
    Less: Itemized deductions
     
     
    -$13,000
     
    Taxable Income
     
     
     
    $48,890
    Tax Liability
    $6,676
     
     
     
    Less: Estimated Tax Payments
    -$5,900
     
     
     
    Net tax payable (or refund due) for 202X
    $776
     
     
     
     
     
     
     
     
    Cost of Annuity
    $46,800
     
     
     
    Monthly Payments
    $450
     
     
     
    Number of Monthly Payments
    260
     
     
     
    Exclusion percentage of annuity contract Carl Purchased = Cost of Annuity/ (monthly payments x number of payments); $46,800/ ($450 x 260)
    40.00%
     
     
     
    Annual Exclusion on annuity contract:
     
     
     
     
    Annuity received from group insurance
    $5,400
     
     
     
    Annual Exclusion on annuity contract = annuity received x Exclusion percentage; $5400 x 40%
    $2,160
     
     
     
    Annuity payment included in gross income = Annuity received - Annual exclusion: $5,400 - $2,160
    $3,240
     
     
     
     
     
     
     
     
    Amount of the Social Security benefits that include in gross income is the lesser of the two following amounts
     
     
     
     
    a. 85% x $14,000
    $11,900
     
     
     
     
     
     
     
     
    Imputed interest on gift loan: Carl made below market loan of amount $60,000 to her daughter qualifies for $100,000 loan exception, earned net income of $1500 from investment must include in Carl's gross income instead of $60,000 x 6% (federal tax rate) =
    $3600
     
     
     
     
     
     
     
     
    Net rental income from the townhouse =
     
     
     
     
     
     
     
     
     
    Rent income
     
    $9,000
     
     
    Less: Expenses
     
     
     
     
                  Utilities
    $2,800
     
     
     
                  Maintenance
    $1,000
     
     
     
                  Real estate taxes
    $750
     
     
     
                  Insurance
    $700
     
     
     
                  Depreciation
    $2,000
    -$7,250
     
     
    Net rent income
     
    $1,750
     
     
     
     
     
     
     
    Carl does not qualify for a dependency deduction as her daughter is independent.
     
     
     
     
     
     
     
     
     
    Carl's itemized deductions
     
     
     
     
    Personal property...
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