Use the following information to complete Phillip and Claire Dunphy\'s 2014 fede
ID: 2454788 • Letter: U
Question
Use the following information to complete Phillip and Claire Dunphy's 2014 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps. Ignore the alternative minimum tax for this problem.
Any required forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov) or moodle. The instructions on moodle can be helpful in completing the forms.
The forms will include forms 1040, Schedule A, C, D, SE, 4562, 8863 and 8949. You need to staple and hand in the completed forms (all the information should be typed into the forms) in the above order with a printed cover sheet (10% of the grade will be based on the document organization and clearance).
This project is time consuming. Please do not wait until the last minutes. Your solutions must be the result of your own work, not a copy of another student’s solutions. Please turn in your finished project with a cover sheet before 10:30am, Dec. 3rd.
Facts:
Phillip and Claire are married and file a joint return. Phillip is self-employed as a real estate agent, and Claire is a flight attendant. Phillip and Claire have three dependent children. All three children live at home with Phillip and Claire for the entire year.
The Dunphys provide you with the following additional information:
The Dunphys do not want to contribute to the presidential election campaign.
The Dunphys live at 1234 Canal Blvd, Thibodaux, LA 70301
Phillip's birthday is 11/5/1966 and his Social Security number is 321-44-5766.
Claire's birthday is 5/12/1969 and her Social Security number is 567-77-1258.
Haley's birthday is 11/6/2000 and her Social Security number is 621-18-7592.
Alex's birthday is 2/1/2002 and her Social Security number is 621-92-8751.
Luke's birthday is 12/12/2006 and his Social Security number is 621-99-9926.
The Dunphys do not have any foreign bank accounts or trusts.
Claire received a Form W-2 from her employer reporting the following information for 2014:
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Wages, tips, other compensation: Federal income tax withheld Social Security tax
Medicare tax
State income taxes withheld
$55,000 6,375 3,600 825 1,800
Phillip and Claire received $300 of interest from Chase Savings Bank on a joint account. They also received a qualified dividend of $395 on jointly owned stock in Xila Corporation. In addition, they received $200 of interest from New Orleans Municipal bonds.
Phillip's real estate business is named “Phillip Dunphy Realty.” His business is located at 5678 Main Street, Houma, LA 70112, and his employer identification number is 93- 3488888. Phillip's gross receipts during the year were $350,000. Phillip uses the cash method of accounting for his business. Phillip's business expenses are as follows:
Phillip purchased $205,000 of office furniture and equipment held for business use on March 4, 2014. He would like to use the Sec. 179 immediate expensing, but he has elected to not claim any bonus depreciation.
The assets Phillip acquired and placed into service before 2014 are as follows:
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Date Acquired
3/1/08 3/1/08 5/1/08 4/12/11 5/13/13
Asset
Office building Land
Furniture
Office equipment Computers
Original Cost
$900,000 100,000 200,000 120,000 50,000
for any of the assets above, nor did he take
[page2image12664]
Phillip did not elect a Section 179 deduction advantage of the depreciation bonus.
7. The Dunphys sold 55 shares of Fizbo Corporation common stock on September 3, 2014, for $90 a share. The Dunphys purchased the stock on November 8, 2013, for $65 a share. They also sold a painting for $13,000 on March 1, 2014. Claire purchased the painting for $20,050 on September 1, 2005, as an investment.
8. Phillip and Claire’s personal expenses for the year are as follows:
Credit card debt
Qualified medical bills
Real property taxes
Home mortgage interest
Homeowners insurance on the home
Cash contributions to NSU accounting program Union dues
Tax return preparation fee (no Schedule C)
$ 800 4,400 3,300 9,500 1,200 4,500 100 360
9. Claire’s father passed away in 2013. In 2014, Phillip and Claire received $50,000 in life insurance proceeds. Phillip and Claire support Claire’s mother, Joy Freud (333-66-9999), in an assisted living facility in Houma. They paid 75% of her support in 2014. Joy’s only income is $12,000 nontaxable social security benefits.
10. Phillip made timely estimated federal income tax payments of $14,000 each quarter during 2014. He also made estimated state income tax payments of $1,000 each quarter. Phillip made all fourth-quarter payments on December 31, 2014. They would like to receive a refund for any overpayments.
Hint: suggested order to finish the project
a) Form4562
b) Schedule C
c) Schedule SE
d) Form 8949
e) Schedule D
f) Form 1040 (to line 38)
g) Schedule A
h) Form 1040 (after line 38)
Explanation / Answer
a)Claim your deduction for depreciation and amortization, Make the election under section 179 to expense certain property, and Provide information on the business/investment use of automobiles and other listed property.
b)to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.
c)Use this schedule to figure the tax due on net earnings from self-employment. The Social Security Administration uses the information from Schedule SE to figure your benefits under the social security program. This tax applies no matter how old you are and even if you are already getting social security or Medicare benefits.
d)Use Form 8949 to report sales and exchanges of capital assets. Form 8949 allows you and the IRS to reconcile amounts that were reported to you and the IRS on Form 1099-B or 1099-S (or substitute statement) with the amounts you report on your return. If you receive Form 1099-B or 1099-S (or substitute statement), always report the proceeds (sales price) shown on that form (or statement) in column (d) of Form 8949
e)To figure the overall gain or loss from transactions reported on Form 8949, To report certain transactions you do not have to report on Form 8949, To report a gain from Form 2439 or 6252 or Part I of Form 4797, To report a gain or loss from Form 4684, 6781, or 8824, To report a gain or loss from a partnership, S corporation, estate or trust, To report capital gain distributions not reported directly on Form 1040, line 13
f)Amount from line 37 (adjusted gross income) .
g)Use this schedule to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.
h)9a Check if: { You were born before January 2, 1950, Blind. Spouse was born before January 2, 1950, Blind.} Total boxes checked 39a b If your spouse itemizes on a separate return or you were a dual-status alien, check here
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