Reference no: EM13793476

FACTS

Karl Heinz Geppert and Helga Margot Geppert, a married couple, live at 222 Allweh Street Houston, Texas 77096-3586. Their home telephone number is (281) 488-2843, home fax number is (281) 486-3457, cell telephone number for Karl is (832) 338-8732 and cell telephone number for Helga is (832) 338-8733. Karl, whose social security number is 464-54-4389 and date of birth is April 2, 1963, is employed as a Financial Analyst with Tavernier Financial Services, Inc. located at 1900 Sirbu Street Houston, Texas 77001-0002 and whose Employer Identification Number 36-4572781.

Helga's social security number is 436-28-7428 and her date of birth is January 10, 1965. She is presently a Self-Employed sole owner of a small retail antique shop (HELGA'S ANTIQUE SHOP) which she has owned and operated since January 6, 2011. The Employer Identification Number for the antique shop is 76-3764292. The Gepperts have two (2) children who lived with them for the entire year of 2014 and that they fully supported for the entire year of 2014. The two (2) children are Claudine Saja Geppert (age 17 (date of birth November 14, 1997) and social security number 652-35-2842) and Hans Michael Geppert (age 10 (date of birth June 16, 2004) and social security number 637-28-2416). In addition, the Gepperts provided in 2014 more than one-half (1/2) of the support of Helga Geppert's mother, Regina Doina Steich, (age 72 (date of birth May 29, 1942) at the end of 2014 and social security number 434-27-2792) and who lived the entire year of 2014 in her own home located in Austin, Texas and her only Gross Income for 2014 was nontaxable Social Security Benefits of $4,200.

The Gepperts, who neither wishes to contribute to the Presidential Election Campaign Fund, have presented you with the following information to prepare their 2014 Federal Income Tax Return:

(a) Karl earned a salary from Tavernier Financial Services, Inc. of $61,540 (also Social Security Wages and Medicare Wages). Federal Income Taxes withheld from his pay was $5,276, Social Security Taxes (FICA) withheld was $3,815 and Medicare Taxes withheld was $892. Karl is covered by a retirement pension plan provided by Tavernier Financial Services, Inc.

(b) The Gepperts received Interest on Savings Accounts of $1,200 from Enkenbach National Bank and Interest of $520 from Mainz Municipal Bonds (local government bonds) that they own. In addition, the Gepperts received Cash Dividends (all "Qualified Dividends") of $442 from Common Stock they own in Trier Corporation.

(c) Helga uses the Cash Method Of Accounting for Federal Income Tax purposes for her business, HELGA'S ANTIQUE SHOP, and the business code for the business for Federal Income Tax purposes is 453990. Relevant Financial Information for the business for 2014 is as follows:

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Gross Sales                                $166,800

Less: Returns And Allowances        5,250     

Expenses

Accounting Services                     $ 4,800 

Advertising                                  3,500

Employee Wages                          38,720

Payroll Taxes                               3,866

Office Rent                                 20,800

Entertainment Of Customers           1,500

Interest (Miscellaneous Debts)        2,600

Seminar (Related To Antique Retailers)            1,400

Supplies                                     2,450

Telephone                                    2,600

Utilities                                     2,300

INVENTORY

Beginning Inventory January 1, 2014            $38,400

Ending Inventory December 31, 2014                  26,800

Purchases In 2014                            22,900

All Inventory is valued at cost. There were no changes in determining quantities, costs or valuations between Opening and Closing Inventory.

(All of the above Revenues, Expenses and Expenditures represent Cash transactions  that occurred during the year of 2014)

DEPRECIABLE ASSETS Original

Description                      Cost       Date Purchased

Personal Computer And Printer    $1,600.00   January 2, 2014

(Five-Year Property)

Office Equipment                250.00    January 2, 2014

(Calculators, etc.)

(Five-Year Property)

Furniture And Fixtures           12,000.00   March 5, 2011

  (Seven-Year Property)

(All of the above assets are used exclusively at Helga's Antique Shop and were originally placed in service on the date purchased)

Helga elected to take the Section 179 Deduction for all assets acquired during the year of 2014. Assets acquired before 2014 are depreciated using the designated useful life and the Section 179 Deduction was not elected. (The First Year Additional Depreciation was not elected for any of these assets).

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Helga also drove in 2014 her personal automobile, a 2011 Ford Taurus, which she acquired on April 28, 2011, a total of 5,000 miles for business purposes. Helga has always used the automobile in her business and drove the automobile a total of 15,000 miles for the entire year of 2014 including 5,200 of commuting miles (Beginning Mileage Reading was 35,000 miles and Ending Mileage Reading was 50,000 miles). Helga uses the Standard Mileage Method (Automatic Mileage Method) ($.565 per mile in 2014) to recover the cost of using her automobile for business purposes. In 2014, Helga also paid $110 for parking and toll fees while using the automobile for business purposes and paid a total of $600 of Interest on the loan for the automobile.

(d) The Gepperts also jointly own two (2) rent homes that they rent out (Actively Participate) to people unrelated to them. The first rent home (Rent Home #1) (not Low-Income Housing) is located at 825 Alsenborn Street Houston, Texas 77084-5232. The Gepperts originally began to rent this home on May 1, 1995 when its depreciable basis was $30,000 (total cost of $37,500 less $7,500 allocated to the Land (Straight-Line Depreciation not elected)). The second rent home (Rent Home #2) is located at 1316 Acor Avenue Houston, Texas 77076-1236. The Gepperts originally began to rent this home on November 18, 2009 when its depreciable basis was $50,000 (total cost of $60,000 less $10,000 allocated to the Land). Relevant information (all Cash transactions) that pertains to the rent homes for 2014 is as follows:

Rent Home #1        Rent Home #2

Total Rental Revenues            $8,400             $10,200

EXPENSES

Insurance                  1,860               1,970

Mortgage Interest           3,140               3,250

Repairs                           450                380

Property (Real Estate) Taxes  2,130               2,410

Lawn Maintenance           310                360

In addition to the above, Karl Geppert drove in 2014 his personal automobile, a 2011 Mercury Sable, in attending to the rental properties a total of 400 miles (200 miles for each property (16.667 miles per month)). Finally, on June 19, 2014, the Gepperts purchased new appliances (ie. refrigerator, stove and dishwasher) (five-year property) for rent home #1 for a total purchase price of $1,950.

(e) Karl attended a Financial Services seminar in San Francisco, California. He incurred unreimbursed expenses of $1,450 for airfare, lodging and meals ($160 of the $1,450 was for meals).

In addition, Karl drove in 2014 his personal automobile a total of 1,200 miles (100 miles per month) for work related purposes. Karl purchased the car on February 3, 2011 and has always used it for work related purposes. He drove the car a total of 12,000 miles in 2014 of which 5,200 were commuting miles (average daily round trip commuting distance of 20 miles per day) (Beginning Mileage Reading was 50,000 miles and Ending Mileage Reading was 65,000 miles). Karl has always used the Standard Mileage Method (Automatic Mileage Method) in recovering the cost of using his automobile for work related purposes.

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(f) The Gepperts incurred the following personal expenses during the year of 2014:

Medical Expenses (Unreimbursed):

  For Themselves And Their Children               $5,500

  For Helga's Mother                                   1,900

Real Estate Taxes On Principal Residence              3,470

Home Mortgage Interest On Principal Residence        9,600

(Saarbrucken Mortgage Company)

Credit Card Interest                               1,900

Interest On Car Loans                                   2,000

Charitable Contributions - Church (Cash)              2,600

Charitable Contributions - (Property - Clothing, etc.) (FMV) 460 ($1,000 ORIGINAL COST)

(Purple Heart 1240 North Main Street Houston, Texas 77001-8877)

Income Tax Preparation Fee                          325

(g) The Gepperts utilizes the Internal Revenue Service (IRS) Optional State Sales Tax Table (See page A-14 through page A-15 of the Instructions for Schedule A) to compute their Itemized Deduction for General Sales Taxes (Their State General Sales Tax Rate is 6.25% and their Local General Sales Tax Rate is 2.00% for a Total Sales Tax Rate of 8.25%).

(h) The Gepperts paid an unrelated housekeeper/child caretaker, Alessandra Suzanne Giertler, (address 4682 Munich Street Houston, Texas 77048-7492 and social security number 456-73-5515) and telephone number (281) 783-4219, $250 per month during the entire year of 2014 to care for their youngest child at their home while they were at work.

(i) The Geppert's 2013 Federal Income Tax Liability was $12,420.

(j) Helga Geppert made the following Estimated Tax Payments for the year of 2014:

April 15, 2014            $2,000

June 16, 2014             2,100

September 15, 2014        2,600

January 15, 2015           1,000

(k) The Gepperts will file a Joint Federal Income Tax Return for the year of 2014.

(l) If the Gepperts will receive a refund for their 2014 Federal Income Tax Return, they would like for the refund to be Direct Deposited into their bank account as follows:

Name Of Financial Institution:  Pavla Bank Of Texas

Routing Number:           111000025

Checking Account Number:   0052894619522        

(m) Everyone on the Tax Return was covered by Health Insurance for the entire year.