Cumulative Software Return Problem
Dr. Ivan I. Incisor and his wife Irene are married and file a joint return for 2020. Ivans Social Security number is 477-34-4321 and he is 56 years old (D.O.B. 7/18/64). Irene I. Incisors Social Security number is 637-34-4927 and she is 53 years old (D.O.B. 8/2/67). They live at 468 Mule Deer Lane, College Station, TX 77845.
Dr. Incisor is a dentist and he took 6 months off work to attend a cosmetic dentistry degree program in 2020. He is employed at Bitewing Dental Clinic. For two of those months he was considered unemployed and received unemployment compensation.
The Incisors have a 12-year-old son (D.O.B. 2/15/2008), Ira, who is enrolled in the 6th grade at the Perpetual Perpetuity School. Iras Social Security number is 690-99-9999. When Irene began her Schedule C business, day care was needed for Ira after school. The Incisors paid $4,000 to a Day Care Center. The Day Care Center was (Humpty Dumpty, 100 College Station, TX 77845 Tax Id 38-0000000) The Incisors also have a 19 year-old daughter, Iris, who is a part-time freshman student at Snow Mass Community College (SMCC). Iris Social Security number is 899-99-9999. Iris is married to Sean Slacker (SS No. 896-33-0954), who is 19 years old and a part-time student at SMCC. Sean and Iris have a 1-year-old child, Seth Slacker (SS No. 648-99-4306). Sean, Iris, and Seth all live in an apartment up the street from Ivan and Irene during the entire current calendar year. Sean and Iris both work for Seans wealthy grandfather as apprentices in his business. Their wages for the year were a combined $50,000, which allowed them to pay all the personal expenses for themselves and their son. Ivan and Irene heard about the new $500 other dependent credit and were hoping to claim their daughter Iris.
Ivan went to a local casino and won $6,000 playing Keno on 7/04/2020. Ivan had no other gambling income or loss for the year. This amount was reported on the W-2G. The winnings were reported to Texas State Lottery Commission, Austin, TX. (fed id 38-1238790). There was no federal taxes withheld.
In February, Irene received $50,000 in life insurance proceeds from the death of her friend Sharon.
In July, Ivans Uncle Igor died and left him real estate (undeveloped land) worth $72,000.
In March of 2008 Ivan loaned a friend (Bob Borrower) $10,000. This debt was evidenced by a written note and Bob was supposed to repay it in 2020. In 2020 Bob filed for bankruptcy and the debt is completely worthless.
Ten years ago, Ivan and Irene were divorced. Ivan then married Mary Molar, but that marriage did not work out and they were divorced a year later. Eight years ago, Ivan and Irene were remarried. Under their divorce decree dated 12/12/2011, Ivan pays Mary $13,000 per year alimony. All payments were made on time during 2020. Marys Social Security number is 667-34-9224.
Bitewing Dental Clinic, Inc., pays Ivans dental license fees and membership dues to dental organizations. During 2020, Bitewing paid $1,240 for such dues and fees for Ivan.
Ivan and Irene paid the following in 2020 (all by check or can otherwise be substantiated):
Ivan and Irenes 2020 Payments
Contributions to Perpetual Perpetuity Catholic Church
$400
Tuition to Perpetual Perpetuity Catholic School for Ira
$6,000
Clothes to Salvation Army (10 bags in good condition) 7/15/2020
$350
Contributions to George Kerrys Congressional Campaign
$250
Psychotherapy for Irene
$1,000
Doctor Bills
$8,000
Medical Insurance Premiums
$10,000
Eyeglasses for Ira
$375
Prescription Medication and Drugs
$1,000
Credit Card Interest
$1,345
Interest on Ivans dental school loans-Form 1098E-Country Mortgage-Box 1 $2,500
(Ivan carried a half course load in 2020, and the loan was for tuition. The loan Interest paid in 2020 related to the tuition from the 2020 year).
Tuition paid in 2020-Assume that Ivan took these courses to maintain and improve his existing skills as a Dentist. This amount was reported on the Form 1098-T. (See attached Form 1098-T). This was the first time Ivan has used any education credits.
Ivan has not been convicted of any felony drug offense.
Determine the tax effects of the education expenses of $10,000
Other Payments
Auto loan interest on home equity loan. Country Mortgage (auto was paid for by a home equity loan on residence – There was no form 1098). The interest was for their non-business 2009 Saturn View (For other interest- see forms)
$900
Auto insurance
$1,600
Dace Deduction, CPA, for preparation of last years tax return
$700
Safe-deposit box for storage of stocks and tax data
$100
Unreimbursed business expense for Ivan(seminar on tooth polishing)
$700
On June 17, Ivan purchased a new Professional HDV Camcorder for $17,000. While the Incisors were on vacation from 8/22-91/20, someone broke into their residence and stole the Camcorder. Ivans area was declared a major disaster area due to Hurricane Laura that occurred during this time period. The FEMA disaster declaration number was DR-4572-TX. There were several houses where there was looting. Ivans homeowners insurance did not reimburse him for any part of the loss since he declined the special premium add-on for high value items required by his policy. Ivan also filed a police report.
For the 2020 tax year, on March 15, 2020, Ivan contributed $5,000 to a traditional IRA for himself and $5,000 to a traditional IRA for his wife. He is not covered by a qualified retirement plan at work.
Ivan owned 1,000 shares of Behemoth Airline stock with a basis of $30 per share. The stock was purchased 12 years ago on June 10, 2007. Ivan sells 500 shares of Behemoth stock to his uncle Seth and 500 of the shares to his sister Sara for $5 per share on December 31, 2020. There was no 1099-B for the two sales above.
Form 1099 Bs related other personal investments and all other tax forms are provided below. Assume that there were no capital loss carryovers.
(Refer to the attached tax forms along with other information below for other deductible expenses or inclusions in income)
When entering on Intuit software assume the basis was not reported on the Form 1099-B for any of the sales
Grape Corporation
Payer’s Name and Address
1a. Date of Sale Exchange
2020
Form 1099-B
Proceeds From
Broker and Barter
Exchange
Transactions
Grape Corporation
PO Box 444
New Orleans, LA 56197
9/25/2020
1b. Date of Acquisition
12/8/2019
Stocks, bonds, etc. Gross Proceeds
Copy B for
Recipient
$9,975
PAYER’S FEDERAL ID NUMBER
Cost or Other Basis
Federal Income Tax Withheld
38-7654321
$10,430
RECIPIENTS IDENTIFICATION NUMBER
Box 2 Short-Term
6.
xxx-xx-4321
RECEIPEINT’S NAME
7.
8. Type of Gain or Loss
Ivan Incisor
Street Address
9. Description
468 Mule Deer Lane
100 Shares Preferred
City, State, Zip
10. Profit or Loss
11. Unrealized Gain or Loss Open
College Station, TX 77845
Realized in 2011
Contracts in 2010
Account Number
12. Unrealized Gain or Loss on Open
13. Aggregate Profit or Loss Contracts
Contracts in 2011
CUSIP Number
14. Bartering
15.
Orange Corporation
Payer’s Name and Address
1a. Date of Sale Exchange
2020
Form 1099-B
Proceeds From
Broker and Barter
Exchange
Transactions
Orange Corporation
PO Box 777
Naples , Florida 48897
4/16/2020
1b. Date of Acquisition
2/1/1997
Stocks, bonds, etc. Gross Proceeds
Copy B for
Recipient
$3,000
PAYER’S FEDERAL ID NUMBER
Cost or Other Basis
Federal Income Tax Withheld
38-1234567
$2,150
RECIPIENTS IDENTIFICATION NUMBER
Box 2 Long-Term
6.
xxx-xx-4321
RECEIPEINT’S NAME
7.
8. Type of Gain or Loss
Ivan Incisor
Street Address
9. Description
468 Mule Deer Lane
100 Shares Common
City, State, Zip
10. Profit or Loss
11. Unrealized Gain or Loss Open
College Station, TX 77845
Realized in 2011
Contracts in 2010
Account Number
12. Unrealized Gain or Loss on Open
13. Aggregate Profit or Loss Contracts
Contracts in 2011
CUSIP Number
14. Bartering
15.
Banana Inc.
Payer’s Name and Address
1a. Date of Sale Exchange
2020
Form 1099-B
Proceeds From
Broker and Barter
Exchange
Transactions
Banana Inc.
PO Box 123
Oceanside, CA 99780
7/31/2020
1b. Date of Acquisition
7/17/2000
Stocks, bonds, etc. Gross Proceeds
Copy B for
Recipient
$1,950
PAYER’S FEDERAL ID NUMBER
Cost or Other Basis
Federal Income Tax Withheld
$4,210
RECIPIENTS IDENTIFICATION NUMBER
Box 2 Long-Term
6.
xxx-xx-4321
Long-Term
RECEIPEINT’S NAME
7.
8. Type of Gain or Loss
Ivan Incisor
Street Address
9. Description
468 Mule Deer Lane
100 Shares Common
City, State, Zip
10. Profit or Loss
11. Unrealized Gain or Loss Open
College Station, TX 77845
Realized in 2011
Contracts in 2010
Account Number
12. Unrealized Gain or Loss on Open
13. Aggregate Profit or Loss Contracts
Contracts in 2011
CUSIP Number
14. Bartering
15.
Georgia Peach
Payer’s Name and Address
1a. Date of Sale Exchange
2020
Form 1099-B
Proceeds From
Broker and Barter
Exchange
Transactions
Georgia Peach
PO Box 765
Atlanta, GA 99780
10/22/2020
1b. Date of Acquisition
5/3/2005
Stocks, bonds, etc. Gross Proceeds
Copy B for
Recipient
$60,120
PAYER’S FEDERAL ID NUMBER
Cost or Other Basis
Federal Income Tax Withheld
38-7654321
$56,480
RECIPIENTS IDENTIFICATION NUMBER
Box 2 Long-Term
6.
xxx-xx-4321
Long-Term
RECEIPEINT’S NAME
7.
8. Type of Gain or Loss
Ivan Incisor
Street Address
9. Description
468 Mule Deer Lane
Peach Mutual Fund 5,010.15 shares
City, State, Zip
10. Profit or Loss
11. Unrealized Gain or Loss Open
College Station, TX 77845
Realized in 2011
Contracts in 2010
Account Number
12. Unrealized Gain or Loss on Open
13. Aggregate Profit or Loss Contracts
Contracts in 2011
CUSIP Number
14. Bartering
15.
Plum Inc. 1099
Payer’s Name and Address
1a. Date of Sale Exchange
2020
Form 1099-B
Proceeds From
Broker and Barter
Exchange
Transactions
Plum Inc.
PO Box 765
Venice, FL 99780
1/2/2020
1b. Date of Acquisition
12/30/2004
Stocks, bonds, etc. Gross Proceeds
Copy B for
Recipient
$5,130
PAYER’S FEDERAL ID NUMBER
Cost or Other Basis
Federal Income Tax Withheld
38-7654321
$5,320
RECIPIENTS IDENTIFICATION NUMBER
Box 2 Long-Term
6.
xxx-xx-4321
Long-Term
RECEIPEINT’S NAME
7.
8. Type of Gain or Loss
Ivan Incisor
Street Address
9. Description
468 Mule Deer Lane
5 bonds due 4/20/17
City, State, Zip
10. Profit or Loss
11. Unrealized Gain or Loss Open
College Station, TX 77845
Realized in 2011
Contracts in 2010
Account Number
12. Unrealized Gain or Loss on Open
13. Aggregate Profit or Loss Contracts
Contracts in 2011
CUSIP Number
14. Bartering
15.
Bitewing Dental Clinic Inc. W-2
W-2 Information
1. Wages, Tips and Other Compensation
2. Federal Income Tax Withheld
$99,000
$14,000
a. Employee Soc. Sec. No.
3. Social Security Wages
4. Social Security Tax Withheld
477-34-4321
$99,000
$6,138
b. Employer ID Number
5. Medicare, Wages and Tips
6. Medicare Tax Withheld
38-111111
$99,000
$1,436
c. Employer’s name, address and zip code
Bitewing Dental Clinic, Inc.
777 Dental Lane
College Station, TX 77845
d. Control Number
0000
e. Ivan Incisor
468 Mule Deer Lane
College Station, TX 77845
7. Social Security Tips
8. Allocated Tips
9.
10.
11. Nonqualified Compensation
12 a.
13. Stat. Employer
12 b.
14. Retirement Plan
12 c.
Third Party Sick Pay
12 d.
15. State Employer ID.
16. State Wages Tips
17. State Income Tax
38-111112
$99,000
$5,000
18. Local, Wages, Tips
19. Local Income Tax
Big Electric Company
Payer’s Name and Address
Payer’s RTN Optional
2020
Form 1099-INT
INTEREST
INCOME
Big Electric Company
PO Box 9999
Myrtle Beach, SC
12457
1. Interest Income
$650
2. Early Withdrawal Penalty
Payer’s Federal ID Number
Recipients ID No.
3. Interest on US Bonds
Copy B For Recipient
381-111111
XXX-XX-4321
Recipients Name
4. Federal Income Tax Withheld
5. Investment Expense
Ivan Incisor
Street Address
6. Foreign Tax Paid
7. Foreign Country or US Possession
468 Mule Deer Lane
City, State Zip
8. Tax Exempt Interest
9. Specific Private Activity Bonds Interest
College Station, TX 77845
Account Number (see instructions)
10. Tax Exempt Cusip No.
11. State
12. State Identification No.
1230987123
13. State Tax Withheld
Boulder City Municipal Bonds
Payer’s Name and Address
Payer’s RTN Optional
2020
Form 1099-INT
INTEREST
INCOME
Austin Municipal Bonds-exempt from state tax
PO Box 9999
Austin, TX 77845
1. Interest Income
2. Early Withdrawal Penalty
Payer’s Federal ID Number
Recipients ID No.
3. Interest on US Bonds
Copy B For Recipient
381-111111
XXX-XX-4321
Recipients Name
4. Federal Income Tax Withheld
5. Investment Expense
Ivan Incisor
Street Address
6. Foreign Tax Paid
7. Foreign Country or US Possession
468 Mule Deer Lane
City, State Zip
8. Tax Exempt Interest
9. Specific Private Activity Bonds Interest
College Station, TX 77845
$650
Account Number (see instructions)
10. Tax Exempt Cusip No.
11. State
12. State Identification No.
1230987123
13. State Tax Withheld
Pacific Northwest Bank
Payer’s Name and Address
Payer’s RTN Optional
2020
Form 1099-INT
INTEREST
INCOME
Pacific Northwest Bank
PO Box 7560
Denver, CO 99206
1. Interest Income
$380
2. Early Withdrawal Penalty
Payer’s Federal ID Number
Recipients ID No.
3. Interest on US Bonds
Copy B For Recipient
381-111111
XXX-XX-4321
Recipients Name
4. Federal Income Tax Withheld
5. Investment Expense
Ivan Incisor
Street Address
6. Foreign Tax Paid
7. Foreign Country or US Possession
468 Mule Deer Lane
City, State Zip
8. Tax Exempt Interest
9. Specific Private Activity Bonds Interest
College Station, TX 77845
Account Number (see instructions)
10. Tax Exempt Cusip No.
11. State
12. State Identification No.
1230987123
X
exempt
13. State Tax Withheld
Payers Activity Bonds 1099
Payer’s Name and Address
Payer’s RTN Optional
2020
Form 1099-INT
Private Activity Bonds
PO Box 5555
Del Mar, CA 92014
1. Interest Income
2. Early Withdrawal Penalty
Payer’s Federal ID Number
Recipients ID No.
3. Interest on US Bonds
33-0711111
xxx-xx-9415
Recipients Name
4. Federal Income Tax Withheld
5. Investment Expense
Ivan Incisor
Street Address
6. Foreign Tax Paid
7.
468 Mule Deer Lane,
City, State Zip
8. Tax Exempt Interest
9. Specific Private Activity Bonds Interest
College Station, TX 77845
$ 80,000
$ 80,000
15. State
16. State Identification No.
10. Mkt. Discount
11. Bond Premium
14. Tax Exempt and Tax Credit CUSIP No.
17. State Tax Withheld
13. Bond Premium on Tax Exempt Interest
Mango Mutual Fund
Payer’s Name and Address
1a. Ordinary Dividends
2020
Form 1099 DIV
Proceeds From
Broker and Barter
Exchange
Transactions
Mango Mutual Fund
PO Box 9999
Myrtle Beach, SC 12457
1b. Qualified Dividends
2b. Unreap. Sec 1250 Gain
PAYER’S FEDERAL ID NUMBER
2a. Capital Gain Distribution
2c. Section 1202 Gain
38-111111
$750
RECIPIENTS IDENTIFICATION NUMBER
2d. Collectibles
XXX-XX-4321
Copy B for
Recipient
RECEIPEINT’S NAME
3. Non Dividend Distributions
4. Federal Income Tax W/H
Ivan Incisor
Street Address
5. Investment Expense
468 Mule Deer Lane
City, State, Zip
6. Foreign Taxes Paid
7. Foreign Country or US Possession
College Station, TX 77845
Account Number
8. Cash liquid. Distributions
9. Noncash liquid. Distributions
Open Contracts in 2010
Account number
(see instructions)
10. Exempt Interest Dividend
11. Private Activity Bonds
Open Contracts in 2011
Loss on Contracts
00067769
1099 DIV
12. State
13. State Id No.
14. State Tax Refund
Big Bank Stock
Payer’s Name and Address
1a. Ordinary Dividends
2020
Form 1099 DIV
Proceeds From
Broker and Barter
Exchange
Transactions
Big Bank Stock
PO Box 9999
Jacksonville, FL 45178
$850
1b. Qualified Dividends
2b. Unreap. Sec 1250 Gain
$850
PAYER’S FEDERAL ID NUMBER
2a. Capital Gain Distribution
2c. Section 1202 Gain
38-111111
RECIPIENTS IDENTIFICATION NUMBER
2d. Collectibles
XXX-XX-4321
Copy B for
Recipient
RECEIPEINT’S NAME
3. Non Dividend Distributions
4. Federal Income Tax W/H
Ivan Incisor
Street Address
5. Investment Expense
468 Mule Deer Lane
City, State, Zip
6. Foreign Taxes Paid
7. Foreign Country or US Possession
College Station, TX 77845
Account Number
8. Cash liquid. Distributions
9. Noncash liquid. Distributions
Open Contracts in 2010
Account number
(see instructions)
10. Exempt Interest Dividend
11. Private Activity Bonds
Open Contracts in 2011
Loss on Contracts
00067769
1099 DIV
12. State
13. State Id No.
14. State Tax Refund
Big Gas Company
Payer’s Name and Address
1a. Ordinary Dividends
2020
Form 1099 DIV
Proceeds From
Broker and Barter
Exchange
Transactions
Big Gas Company
PO Box 9999
Tulsa, OK 23497
$470
1b. Qualified Dividends
2b. Unreap. Sec 1250 Gain
$470
PAYER’S FEDERAL ID NUMBER
2a. Capital Gain Distribution
2c. Section 1202 Gain
38-111111
RECIPIENTS IDENTIFICATION NUMBER
2d. Collectibles
XXX-XX-4321
Copy B for
Recipient
RECEIPEINT’S NAME
3. Non Dividend Distributions
4. Federal Income Tax W/H
Ivan Incisor
Street Address
5. Investment Expense
468 Mule Deer Lane
City, State, Zip
6. Foreign Taxes Paid
7. Foreign Country or US Possession
College Station, TX 77845
Account Number
8. Cash liquid. Distributions
9. Noncash liquid. Distributions
Open Contracts in 2010
Account number
(see instructions)
10. Exempt Interest Dividend
11. Private Activity Bonds
Open Contracts in 2011
Loss on Contracts
00067769
1099 DIV
12. State
13. State Id No.
14. State Tax Refund
Timador & Embaucar
Payer’s Name and Address
1. Gross Distribution
2020
Form 1099-R
Distribution Form
Timador & Embaucar Brokerage, Inc.
PO Box 9999
Myrtle Beach, SC 12457
$24,000
2a. Taxable Amount
0
2b. Taxable Amount Not Determined
Total Distribution
X
Payer’s Federal ID Number
Recipients ID No.
3. Capital Gain
4. Fed Tax W/H
38-1234321
xxx-xx-4321
(included in box 2a)
Recipients Name
5. Employee Contrib.
6. Net Unrealized Appreciation
Ivan Incisor
Roth Contributions or INS. Premiums
Street Address
7. Dist. Code
IRA SEP
8. Other
468 Mule Deer Lane
G
Simple
City, State Zip
College Station, TX 77845
10. Amount Allocable to IRR within 5 years
11. 1st year of Designated Roth Contribution
9a. Your Percentage of Total Distribution
9b. Employee compensation
Account Number
12. State Tax Withheld
13. State/Payer State No.
14. State Distirib.
1234569
Open Contracts in 2010
15. Local Tax Withheld
16. Name of locality
17. Local Distrib.
Country Mortgage Inc. 1098
Recipients/Lenders Name, Address
2020
Form 1098
Mortgage And
Real Estate
Interest Statement
Country Mortgage, Inc.
PO Box 5321,
Sioux Falls, ND 57117
Recipient’s Fed Id No.
Payer’s Social Security No.
1. Mortgage Interest
02-3222678
xx-xx-4321
$10,875
1/1/2020 Mortgage Balance
$311,000
Payer/Borrower’s Name
2. Points Paid
Ivan Incisor and Irene Incisor
Street Address
3. Real Estate Taxes Paid
468 Mule Deer Lane
$3,100
City or Town, State
College Station, TX 77845
Account Number
1350087
Texas Unemployment Commission 1099
Payer’s Name and Address
1. Unemployment Compensation
2020
Form 1099-G
Certain
Government
Payments
Texas Unemployment Commission
Austin, TX 78712
$3,750
State or Local Income Tax Refund
Copy B for
Recipient
Federal ID Number
Recipients Identification No.
38-1111111
xxx-xx-4321
Recipients Name
Ivan Incisor
Street Address
468 Mule Deer Lane
City, State, Zip
College Station, TX 77845
Account Number
1230987123
Texas A&M 1098
Payer’s Name and Address
1. Payments Received for Qualifying Tuition
2020
Form 1098-T
Certain
Government
Payments
Texas A&M
PO Box 1001
College Station, TX 77845
$10,000
Copy B for
Recipient
Filers Federal ID Number
Students Identification No.
4. Adjustments made for prior year
38-1111111
477-34-4321
Students Name
5. Scholarships or grants
6. Adjustments to scholarships or
grants in the prior year
Ivan Incisor
Street Address
7. Check box if the amount in box 1 includes amounts for an academic period beginning in Jan-March 2021
8. Check If at least a half time
student
468 Mule Deer Lane
City, State, Zip
College Station, TX 77845
Account Number
9. Check if a graduate student
10. Insurance Contract/Reimbursement/Refund
1230987123
Ivan purchased 5 acres of land in Reno, NV, 13 years ago on 10/25/2004. His basis in land was $75,000. On December 31, 2020, he sold that land for $200,000 on the installment method to an unrelated party. Ivan received $45,000 in the year of sale, and the balance was payable at $15,500 per year for the next 10 years, plus market rate interest. The Incisors did not owe any money on the property. No interest will be received until 2020 since the sale was not made until December 31.
On May 15, 2020, Ivan and Irene sold their personal residence for $540,500 and purchased a new house for $725,000. There address was 587 Mockingbird Lane in College Station, TX 77845. They moved to their present address. Assume that there were only $500 in expenses for the sale since they did not use a realtor. They had owned the old house for 25 years. (Purchased on 6/10/92). It had an adjusted basis of $500,000 (Purchase price). Assume that they had no capital improvements on the home sold and that they wish to exclude the maximum gain available. Also assume that the Form 1099-S was received for the sale of the home. They received full payment for the sale. The house had been their personal residence for all the years they were married. They moved into the new house on May 18, 2020. Immediately after the purchase the Incisors Invested $10,000 in energy efficient solar panels and $5,000 to heat the existing swimming pool. The Incisors want to deduct the maximum possible for the Residential Energy Credit. Assume the Incisors have never taken these type of credits before.
On September 1, Irene opened a retail store that specializes in sports car accessories. She materially participated in the business.
The name of the store is Plus Two Comes. (EIN 38-0903267) The store is located at 617 Main Street, College Station, TX 77845. The store uses the cash method of accounting. Her income and expenses for the year are as follows: Assume that Plus Two Comes uses the cost method for its inventory.
Plus Two Comes Income and Expenses
Sales of merchandise
$82,300
Inventory, September 1 (purchased in August)
$62,500
Inventory, December 31
$58,700
Purchases during the year
$35,300
Sales returns and allowances
$525
Office Rental until building was purchased
$7,500
Office expense
$1,400
Insurance
$1,000
Advertising
$3,000
Employee wages
$3,350
Payroll and other business taxes
$505
Interest on bank loan to open store
$2,740
Accounting fees
$300
Utilities
$1,000
Telephone
$800
Maintenance
$480
Miscellaneous
$175
On December 12, Irene purchased the building (non-residential real estate) where her store is located. She paid $340,000 for the land and building. The building was valued at $240,000 for the land was valued at $100,000. Irenes store is the only business in the building.
In addition to the above items, Irene incurred travel expenses to attend a seminar on sports car accessories. She spent $300 on airfare, $400 on lodging, $100 on a rental car, and $150 on meals. Irene has proper receipts for these amounts.
Irene drove her 2004 Ford Explorer (placed into service on 6/01/2005) 1,634 miles for business, driven after September 1, 2020, related to Plus Two Cones. The Explorer was driven a total of 17,000 (business and personal for the year). Included in the 17,000 is 5,000 miles spent commuting to the store. Irene has the required substantiation for this business mileage. She uses the standard mileage method.
The Incisors own a rental beach house (single family residence) in Hawaii. The beach house was rented for the full year during 2020 and was not used by the Incisors during the year. The Incisors were active participants in the management of the rental. Pertinent information about the rental house is as follows:
Rental House Expenses
Address-1237 Pineapple St., Lihue, HI 96766
Rents received
$20,350
Mortgage interest paid-reported on form 1098
$7,800
Real Estate Taxes
$2,400
Utilities
$1,825
Maintenance
$3,000
The house is fully depreciated so there is no depreciation expense.
Required: Prepare the 2020 Federal Income Tax Return for Ivan and Irene Incisor using Intuit Software. Save as a pdf file and upload the For Filing pdf to the blackboard.
Make sure the following you have the following forms prepared.
1. Form 1040 along with the 1040 Schedules 1, 2 and 3
2. Schedule A
3. Schedule C
4. Schedule D
5. Form 8949
6. Schedule E
7. Schedule SE
8. Form 2441
9. Form 4684
10. Form 6251
11. Form 8863
12. Form 6252
13. Form 5695
14. Form 4562
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