The project requires to fill out a 1040 form, Schedule 1, and Schedule A. It also has some additional questions that need to be answered.
ACCOUNTING 308
TAX RETURN PROJECT #1
Daniel B Butler and Freida C. Butler, husband and wife, file a joint return. The butlers live at
625 Oak Street in Corbin, KY 40701. Dan’s Social Security number is 111-11-1112, and
Freida’s is 123-45-6789. Dan was born on January 15, 1968, and Freida was born on
August 20, 1968.
During 2019, Dan and Freida furnished over half of the total support of each of the
following individuals, all of whom still live at home.
a) Gina, their daughter, age 22, a full-time college student, has no income of her own.
Gina’s Social Security number is 123-45-6788.
b) Sam, their son, age 19, who had gross income of $6,300. He graduated from high
school on May 15th 2019, Started College on August 21st 2019, then dropped out of
college in September 2019. Sam’s Social Security number is 123-45-6787.
c) Ben, their oldest son, age 26, is a full-time graduate student with gross income of
$5,200. Ben’s Social Security number is 123-45-6786.
Dan was employed as a manager by WJJJ, Inc. (employer identification number 111111111, 604 Franklin street, Corbin, KY 40702), and Freida was employed as a
salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899
Central Street, Corbin, KY 40701). Selected information from the W-2 Forms provided by
the employers is presented below. Dan and Freida use the cash method.
Line
Description
1
Wages, tips, other compensation
2
Federal income tax withheld
17
State income tax withheld
Dan
Freida
$74,000
$86,000
11,000
11,400
3,960
4,540
Freida sold a house (as part of her job as a real estate agent) on December 30, 2019, and
will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on
the January 5, 2020 closing date.
The Butlers also had:
(1) $1,600 in interest income from their savings account
(2) Freida made a $5,000 contribution to her traditional IRA. (assume fully deductible)
(3) Sale of ABC stock on 8/15/2019 for $11,000 (originally purchased for $4,000 on
1/15/2015)
(4) Sale of XYZ stock on 10/15/2019 for $2,000 (originally purchased for $6,000 on
12/15/2018)
(5) Sale of a boat on 5/15/2019 for $10,000 used for personal recreation (originally
purchased for $20,000 on 6/15/2014)
(6) Interest on the Butlers personal residence is $6,000 (Assume this is tax deductible)
(7) The Butlers paid $5,500 in property taxes on their primary residence
(8) The Butlers made a $6,000 cash contribution to a qualified charitable organization
(9) Daniel inherited publically traded stock worth $30,000 from a deceased uncle on
September 30, 2019.
(10) Immediately after receiving this stock, Daniel sold it for $30,000. This stock was
originally purchased by his uncle on January 15th, 2016 for $23,000.
Additional Questions:
The Butlers had considered making an additional tax-deductible contribution of $3,000 to a
non-profit organization (in addition to their actual $6,000 contribution).
(1) If they had made that contribution, what would have been the effect on their taxable
income?
(2) If they had made that contribution, what would have been their tax savings (i.e. their
tax benefit)?
(3) Two things occurred relating to the stock received from Daniels deceased uncle (1) the
stock was received, and (2) the stock was sold. Explain how both of these items
affected Daniels income tax return.
Prepare the 2019 Federal income tax return for the Butlers’. Additionally, answer
the questions above. You may work in groups no larger than 3 (i.e. 1, 2, or 3). Submit one
tax return per group. Please submit (1) a cover page with a list of students who
participated in the group project, (2) Form 1040, (3) Schedule 1, (4) Schedule A (even if not
required, must be filled out), (5) calculation of Capital gain (including LT or ST), (6)
calculation of tax, and (7) the answers to the questions above (show your calculation and
add an explanation).
Hints:
1) Don’t forget to check the box for the filing status
2) Review the rules as for what qualifies as a “student” for purposes of the Qualifying
Child tests. See IRS publication 501 page 12.
3) Make sure you are using 2019 information (i.e. personal exemptions, standard
deduction, tax brackets etc.).
4) Normally interest and capital gains would require additional forms (Schedule B and
Schedule D). However for this assignment do not prepare those forms/schedules,
simply enter the appropriate amount directly onto form 1040 or Schedule 1.
5) If the taxpayer itemizes the total from Schedule A needs agree with line 9 (form
1040). Prepare the Schedule A regardless of whether or not the taxpayer itemizes.
6) Taxpayers will deduct either their state tax payments (i.e. state tax withholding) or
sales tax, but not both. For this tax return, ignore sales tax (generally, sales tax only
applies in states with no personal state income tax, such as Texas, Florida, etc.).
7) Assume that the Butlers had adequate health insurance coverage.
8) Ignore any tax credits (including child tax credit, EITC, and education credits, etc.).
9) The taxpayer has a refund.
Form
1040 U.S. Individual Income Tax Return 2019
Filing Status
Check only
one box.
(99)
Department of the Treasury—Internal Revenue Service
Single
Married filing jointly
Married filing separately (MFS)
OMB No. 1545-0074
IRS Use Only—Do not write or staple in this space.
Head of household (HOH)
Qualifying widow(er) (QW)
If you checked the MFS box, enter the name of spouse. If you checked the HOH or QW box, enter the child’s name if the qualifying person is
a child but not your dependent. ?
Your first name and middle initial
Last name
Your social security number
If joint return, spouse’s first name and middle initial
Last name
Spouse’s social security number
Home address (number and street). If you have a P.O. box, see instructions.
Presidential Election Campaign
Check here if you, or your spouse if filing
jointly, want $3 to go to this fund.
Checking a box below will not change your
tax or refund.
You
Spouse
Apt. no.
City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).
Foreign country name
Foreign province/state/county
Standard
Deduction
Someone can claim:
Age/Blindness
You:
You as a dependent
If more than four dependents,
see instructions and ? here ?
Your spouse as a dependent
Spouse itemizes on a separate return or you were a dual-status alien
Were born before January 2, 1955
(1) First name
Spouse:
Are blind
Dependents (see instructions):
Standard
Deduction for—
• Single or Married
filing separately,
$12,200
• Married filing
jointly or Qualifying
widow(er),
$24,400
• Head of
household,
$18,350
• If you checked
any box under
Standard
Deduction,
see instructions.
Foreign postal code
Was born before January 2, 1955
(2) Social security number
(3) Relationship to you
Is blind
(4) ? if qualifies for (see instructions):
Child tax credit
Credit for other dependents
Last name
1
Wages, salaries, tips, etc. Attach Form(s) W-2 .
2a
Tax-exempt interest .
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2a
b Taxable interest. Attach Sch. B if required
2b
3a
Qualified dividends .
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b Ordinary dividends. Attach Sch. B if required
3b
4a
IRA distributions .
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b Taxable amount
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4b
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Pensions and annuities .
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d Taxable amount
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4d
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Social security benefits .
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b Taxable amount
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5b
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Capital gain or (loss). Attach Schedule D if required. If not required, check here
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7a
Other income from Schedule 1, line 9
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7b
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Add lines 1, 2b, 3b, 4b, 4d, 5b, 6, and 7a. This is your total income
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Adjustments to income from Schedule 1, line 22
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8a
Subtract line 8a from line 7b. This is your adjusted gross income
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Standard deduction or itemized deductions (from Schedule A) .
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9
Qualified business income deduction. Attach Form 8995 or Form 8995-A .
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10
Add lines 9 and 10 .
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11a
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11b
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Taxable income. Subtract line 11a from line 8b. If zero or less, enter -0-
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 11320B
Form
1040 (2019)
Page 2
Form 1040 (2019)
12a
b
13a
b
• If you have a
qualifying child,
attach Sch. EIC.
• If you have
nontaxable
combat pay, see
instructions.
Refund
Direct deposit?
See instructions.
Amount
You Owe
Third Party
Designee
Tax (see inst.) Check if any from Form(s): 1
8814 2
4972 3
Add Schedule 2, line 3, and line 12a and enter the total
Child tax credit or credit for other dependents .
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12a
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12b
13a
Add Schedule 3, line 7, and line 13a and enter the total
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13b
14
Subtract line 13b from line 12b. If zero or less, enter -0-
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14
15
Other taxes, including self-employment tax, from Schedule 2, line 10 .
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16
Add lines 14 and 15. This is your total tax .
17
Federal income tax withheld from Forms W-2 and 1099
18
Other payments and refundable credits:
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16
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Earned income credit (EIC) .
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18a
b
Additional child tax credit. Attach Schedule 8812
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18b
c
American opportunity credit from Form 8863, line 8
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18c
d
Schedule 3, line 14 .
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18d
e
Add lines 18a through 18d. These are your total other payments and refundable credits
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18e
19
Add lines 17 and 18e. These are your total payments .
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19
20
If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid .
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21a
Amount of line 20 you want refunded to you. If Form 8888 is attached, check here
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Routing number
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Account number
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c Type:
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Checking
22
Amount of line 20 you want applied to your 2020 estimated tax .
23
Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions
24
Estimated tax penalty (see instructions) .
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20
21a
Savings
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?
Do you want to allow another person (other than your paid preparer) to discuss this return with the IRS? See instructions.
Yes. Complete below.
No
(Other than
paid preparer)
Designee’s
name ?
Sign
Here
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Paid
Preparer
Use Only
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Joint return?
See instructions.
Keep a copy for
your records.
Phone
no. ?
Personal identification
?
number (PIN)
Your signature
Date
Your occupation
If the IRS sent you an Identity
Protection PIN, enter it here
(see inst.)
Spouse’s signature. If a joint return, both must sign.
Date
Spouse’s occupation
If the IRS sent your spouse an
Identity Protection PIN, enter it here
(see inst.)
Phone no.
Email address
Preparer’s name
Preparer’s signature
Date
PTIN
Check if:
3rd Party Designee
Firm’s name
Firm’s address
Self-employed
Phone no.
?
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Go to www.irs.gov/Form1040 for instructions and the latest information.
Firm’s EIN
?
Form
1040 (2019)
Itemized Deductions
SCHEDULE A
(Form 1040 or 1040-SR)
(Rev. January 2020)
Department of the Treasury
Internal Revenue Service (99)
OMB No. 1545-0074
to www.irs.gov/ScheduleA for instructions and the latest information.
? Attach to Form 1040 or 1040-SR.
Caution: If you are claiming a net qualified disaster loss on Form 4684, see the instructions for line 16.
Taxes You
Paid
1
2
3
4
Caution: Do not include expenses reimbursed or paid by others.
Medical and dental expenses (see instructions) . . . . . .
Enter amount from Form 1040 or 1040-SR, line 8b 2
Multiply line 2 by 7.5% (0.075) . . . . . . . . . . . .
Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- .
Caution: Your
mortgage interest
deduction may be
limited (see
instructions).
1
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3
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7
8b
c Points not reported to you on Form 1098. See instructions for special
8c
rules . . . . . . . . . . . . . . . . . . . . .
d Mortgage insurance premiums (see instructions) . . . . . . .
8d
e Add lines 8a through 8d . . . . . . . . . . . . . . .
8e
9 Investment interest. Attach Form 4952 if required. See instructions .
9
10 Add lines 8e and 9
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10
11 Gifts by cash or check. If you made any gift of $250 or more, see
11
instructions . . . . . . . . . . . . . . . . . . .
12 Other than by cash or check. If you made any gift of $250 or more,
see instructions. You must attach Form 8283 if over $500 . . . .
12
13 Carryover from prior year . . . . . . . . . . . . . .
13
14 Add lines 11 through 13 . . . . . . . . . . . . . . . . . .
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14
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5 State and local taxes.
a State and local income taxes or general sales taxes. You may include
either income taxes or general sales taxes on line 5a, but not both. If
you elect to include general sales taxes instead of income taxes,
check this box . . . . . . . . . . . . . . . . . ?
b State and local real estate taxes (see instructions) . . . . . . .
c State and local personal property taxes . . . . . . . . . .
d Add lines 5a through 5c . . . . . . . . . . . . . . .
e Enter the smaller of line 5d or $10,000 ($5,000 if married filing
separately) . . . . . . . . . . . . . . . . . . .
6 Other taxes. List type and amount ?
7 Add lines 5e and 6
Interest
You Paid
Attachment
Sequence No. 07
Your social security number
Name(s) shown on Form 1040 or 1040-SR
Medical
and
Dental
Expenses
2019
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8 Home mortgage interest and points. If you didn’t use all of your home
mortgage loan(s) to buy, build, or improve your home, see
instructions and check this box . . . . . . . . . . . ?
a Home mortgage interest and points reported to you on Form 1098.
See instructions if limited . . . . . . . . . . . . . .
5a
5b
5c
5d
5e
6
. .
8a
b Home mortgage interest not reported to you on Form 1098. See
instructions if limited. If paid to the person from whom you bought the
home, see instructions and show that person’s name, identifying no.,
and address . . . . . . . . . . . . . . . . . . .
?
Gifts to
Charity
Caution: If you
made a gift and
got a benefit for it,
see instructions.
Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified
disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See
Theft Losses
instructions .
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16 Other—from list in instructions. List type and amount ?
Other
Itemized
Deductions
16
17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on
Total
Form 1040 or 1040-SR, line 9 . . . . . . . . . . . . . . . . . . . .
17
Itemized
Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction,
check this box .
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For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR.
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Cat. No. 17145C
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Schedule A (Form 1040 or 1040-SR) 2019
SCHEDULE 1
(Form 1040 or 1040-SR)
Department of the Treasury
Internal Revenue Service
OMB No. 1545-0074
Additional Income and Adjustments to Income
? Go
2019
? Attach to Form 1040 or 1040-SR.
to www.irs.gov/Form1040 for instructions and the latest information.
Attachment
Sequence No. 01
Your social security number
Name(s) shown on Form 1040 or 1040-SR
At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any
virtual currency? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part I
1
2a
b
3
4
5
6
7
8
Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . .
Alimony received . . . . . . . . . . . . . . . . . . . . . . . .
Date of original divorce or separation agreement (see instructions) ?
Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . .
Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . . .
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E .
Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . . .
Unemployment compensation . . . . . . . . . . . . . . . . . . . .
Other income. List type and amount ?
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2a
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3
4
5
6
7
9
Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a
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8
9
Part II
Yes
No
Additional Income
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Adjustments to Income
10
11
Educator expenses
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach
Form 2106 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
Health savings account deduction. Attach Form 8889 . . . . . . . . . . . . . . . .
13
Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . . . . . .
14
Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . . . . . .
15
Self-employed SEP, SIMPLE, and qualified plans . . . . . . . . . . . . . . . . . .
16
Self-employed health insurance deduction . . . . . . . . . . . . . . . . . . . .
17
Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . . .
18a Alimony paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Recipient’s SSN
. . . . . . . . . . . . . . . . . . . . . ?
c Date of original divorce or separation agreement (see instructions) ?
19
IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
Student loan interest deduction . . . . . . . . . . . . . . . . . . . . . . .
21
Tuition and fees. Attach Form 8917 . . . . . . . . . . . . . . . . . . . . . .
22
Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or
1040-SR, line 8a . . . . . . . . . . . . . . . . . . . . . . . . . . . .
For Paperwork Reduction Act Notice, see your tax return instructions.
Cat. No. 71479F
10
11
12
13
14
15
16
17
18a
19
20
21
22
Schedule 1 (Form 1040 or 1040-SR) 2019

Purchase answer to see full
attachment