If you use tax forms for your computations you will need Forms 1040 and 8824 and Schedules A B C D and SE. Suggested software: H&R BLOCK Tax Software
Devon Bishop age 45 is single. He lives at 1507 Rose Lane Albuquerque NM 87131. His Social Secur Show more Devon Bishop age 45 is single. He lives at 1507 Rose Lane Albuquerque NM 87131. His Social Security number is 111-11-1111. Devon does not want $3 to go to the Presidential Election Campaign Fund. Devons wife Ariane passed away in 2010. Devons son Tom who is age 16 resides with Devon. Toms Social Security number is 123-45-6788. Devon owns a sole proprietorship for which he uses the accrual method of accounting and maintains no inventory. His revenues and expenses for 2014 are as follows: Sales revenue $740000 Cost of goods sold (based on purchases for the year) 405000 Salary expense 88000 Rent expense 30000 Utilities 8000 Telephone 6500 Advertising 4000 Bad debts 5000 Depreciation 21000 Health insurance* 26000 Accounting and legal fees 7000 Supplies 1000 * $18000 for employees and $8000 for Devon. Other income received by Devon includes the following: Dividend income (qualified dividends): Swan Inc. $10000 Wren Inc. 2000 Interest income: First Bank 11000 Second Bank 2500 City of Asheville bonds 17000 During the year Devon and his sole proprietorship had the following property transactions: a. Sold Blue Inc. stock for $45000 on March 12 2014. He had purchased the stock on September 5 2011 for $50000. b. Received an inheritance of $300000 from his uncle Henry. Devon used $200000 to purchase Green Inc. stock on May 15 2014 and invested $100000 in Gold Inc. stock on May 30 2014. c. Received Orange Inc. stock worth $9500 as a gift from his aunt Jane on June 17 2014. Her adjusted basis for the stock was $5000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1 2008. Devon sold the stock on July 1 2014 for $22000. d. On July 15 2014 Devon sold one-half of the Green Inc. stock for $40000. e. Devon was notified on August 1 2014 that Yellow Inc. stock he purchased from a colleague on September 1 2013 for $52500 had become worthless. While he perceived that the investment was risky he did not anticipate that the corporation would declare bankruptcy. f. On August 15 2014 Devon received a parcel of land in Phoenix worth $220000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth $245000 he also received $25000 cash. Devons adjusted basis for the Tucson parcel was $210000. He originally purchased it on September 18 2011. g. On December 1 2014 Devon sold the condominium in which he had been living for the past 20 years. The sales price was $480000 selling expenses were $28500 and repair expenses related to the sale were $9400. Devon purchased the condominium for $18000 Devons potential itemized deductions exclusive of the aforementioned information are as follows: Medical expenses (before the 10% floor) $ 9500 Property taxes on residence 5800 State income taxes 4000 Charitable contributions 10000 Mortgage interest on residence 9900 Sales taxes paid 5000 During the year Devon makes estimated Federal income tax payments of $40000. Compute Devons lowest net tax payable or refund due for 2014 assuming that he makes any available elections that will reduce the tax. If you use tax forms for your computations you will need Forms 1040 and 8824 and Schedules A B C D and SE. Suggested software: H&R BLOCK Tax Software Show less
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