Week 5 : Comprehensive Case Study 2 Steve Jackson (birthdate December 13, 1965)

Question

Week 5: Comprehensive Case Study 2

Steve Jackson (birthdate December 13, 1965) is a single taxpayer living at 3215 Pacific Dr., Del Mar, CA 92014. His Social Security number is 465-88-9415. In 2017, Steve’s earning and income tax withholding as the manager of a local hotel are:

Earnings from the Ocean View Hotel                                                      $121,500

Federal income tax withheld                                                                       18,500

State Income tax withheld                                                                             9,300

Steve’s other income includes interest from General Electric bonds of $2,550 and interest on a savings account at Wells Fargo Bank of $3,215. Also, Steve received tax-exempt interest of $29,440 on private activity bonds that is subject to alternative minimum tax. Steve had full medical coverage for the entire tax year.

During the year, Steve paid the following amounts (all of which can be substantiated):

Home mortgage interest                                                                          $31,575

Credit card interest                                                                                      1,760

Auto insurance                                                                                                900

State income taxes paid in 2016 (for 2014 audit)                                     12,600

Property taxes on personal residence                                                          6,200

Kaiser HMO premiums                                                                                4,800

Other medical expenses                                                                                  790

CPA fees paid to handle 2014 state audit                                                    7,000

Charitable contributions

      Girl Scouts                                                                                                 800

      San Diego State University (contribution)                                        10,000

      Italian Red Cross                                                                                       250

Required: Complete Steve’s federal tax return for 2017. Use Form 1040, Schedule A, Schedule B, and Form 6251, which can be found on the IRS website. Make realistic assumptions about any missing data.

Explanation / Answer

Steve Jackson Earnings from Ocean view hotel 1,21,500 Federal Income tax witheld 18,500 State income tax witheld 9,300 interest from General Electric bonds 2,550 interest on savings accounts at Wells Fargo Bank 3,215 Gross Total Income 1,55,065 Deductions: Home Mortgage interest 31,575 Auto Insurance 900 State income taxes paid in 2016 (for 2014 audit) 12,600 Kaiser HMO premiums 4,800 Other medical expenses 790 CPA fees paid to handle 2014 state audit 7,000 Interest on Savings Account 3,215 Total (A) 60,880 Charitable Contributions: Girls Scouts 800 San Diego State University (Contributions) 10,000 Italian Red Cross 250 Total (B) 11050 Grand Total Deductions (A+B) 71,930 Income Chargeable to tax 83,135

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