Reference no: EM131286122

The instructions to this cumulative problem.

The Forms 4562 & 8829 are already completed & can be used to assist in other problems too.

Income Tax Accounting - Fall 2016

Jerry R. (age 52, SSN 367-83-9403) and Janet K. (age 48, SSN 361-73-4098) Apps file a joint return.They reside at 410 E. Vernon Avenue, Carlock, Illinois 61725-1287.Use the following information to prepare the Appses' tax return.Use the approach shown in Examples 10-12 in Chapter 11 to compute the Appses' tax liability (1101.03).They both elect to have $3 to go to the presidential campaign fund and file their return on April 10, 2016.

The Appses' household includes David A. Apps, their 12 year old son (SSN 965-26-4381), and Edwin R. Apps (SSN 157-43-2587), Jerry's 78 year old father.Janet and Jerry provide over half of the support of both David and Edwin.David has no income of his own; Edwin received $4,500 in nontaxable social security benefits during the year.

Jerry works as a carpenter. The information on his Form W-2 is show below.Jerry is an active participant in his employer's 401(k) plan.

Taxable wages	$52,000
Social security and Medicare tax withheld	3,978
Federal income tax withheld	4,970
State income tax withheld	2,490

Janet owns and operates J&J Networking.The principal business code is 454390.Janet has no employer ID number.She uses the accrual basis in her business and the cost method for valuing the inventory.No changes have been made in the inventory system.Janet operated her business for all 12 months and has an office in her home that she uses exclusively and regularly for business.Janet materially participates in the business. Information relating to her business operation is as follows:

Gross receipts	$60,950
Returns and allowances	900
Beginning inventory	2,700
Purchases	28,625
Ending inventory	3,825
Expenses:
Advertising	$400	Office expense	$80
Bank service charges	24	Supplies	310
Contribution to SIMPLE plan	10,000	Travel	1,035
Commissions	3,200	Means and entertainment	490
Depreciation on equipmentplaced in service in 2013	1,700	Other business taxes	560
Dues and publications	220	Miscellaneous expenses	35
Insurance (business)	650	Postage expense	110

In addition to the above expenses, Janet uses her personal car in her business.She keeps good records of her business mileage and uses the standard mileage method.The car was first used in the business on May 1, 2012. During 2015 Janet drove 7,631 miles, of which 1,205 were drive for business.The rest were personal miles.

Information related to the Appses' home:

Total area ofhome	1,800 square feet
Area used for business	180 square feet
FMV of home, for purposes of Form 8829, line 36	$240,000
Adjusted basis of home, for purposes of Form 8829, line 36	195,000
Value of land, Form 8829, line 37	20,000
Year the home office was first placed in service	1991
Mortgage interest	$6,250
Real estate taxes	2,400
Homeowner's insurance	680
Utilities	3,200

The Appses own a four-unit apartment building that they actively manage.They paid $150,000 for the building in 1994.Of this amount, $25,000 was allocated to the land.The Appses use MACRS to depreciate the building, which is located at 19 Sunset Road inCarlock, IL60501.

All units were rented for the entire year.Information on the apartments is shown below.

Rental revenue	$33,600
Rental expenses:
Real estate taxes	4,800
Utilities	1,780
Insurance	1,550
Cleaning and maintenance	5,200
Legal and professional fees	125
Mortgage interest	7,200
Repairs	827
Supplies	325

The Appses had other income consisting of the follow.Neither Jerry nor Janet had any interest in a foreign trust or bank account.

Interest from Champion Savings	$2,750
Interest on bonds from the State of Illinois	930
Qualified dividends from General Morris Corporation	425
Qualified dividends from Eagle Corporation	150
Qualified dividends from Roper Corporation	650

The Appses have a $4,950 long-term capital loss carryover from 2014.They also sold the following shares of common stock during 2015.No cost basis was provided on any of the Forms 1099-B.

Number of shares	Company	Date Acquired	Cost	Date Sold	Sales Price
100	Roper Corp.	5/1/09	$5,000	6/12/15	$7,500
50	Fastco Corp.	2/14/15	3,250	7/20/15	2,950
200	Eagle Corp.	3/16/11	6,200	8/10/15	8,100
100	South Corp.	3/14/14	1,500	1/24/15	6,500

A summary of the unreimbursed payments the Appses made during the year includes:

	Jerry	Janet	David	Edwin	Total
Prescription meds	$50	$200	$25	$1,000	$1,275
Doctor bills	60	500	30	200	790
Dentist bills	150	40	200	0	390
Hospital bills	0	1,800	0	2,100	3,900
Transportation	8	72	24	16	120
Eyeglasses	0	122	125	0	247
Over the counter meds	0	50	30	70	150

Taxes:

Sales tax	$1,200
Balance due on 2014 state income tax return	25
Balance due on 2014 federal income tax return	725
Real estate taxes	2,400

Interest:

Mortgage interest	$6,250
Credit card interest	975

Cash contributions:

Church	$2,300
United Way	250
Presidential election campaign	50

In addition to the cash contributions, the Appses donated five shares of S&W common stock to their church on July 30. The stock had been purchased on December 15, 2013, for $2,200. The fair market value of the stock on July 30 was $6,000.

Janet and Jerry each contribute the maximum amount allowed for 2015 to their respective traditional IRAs.

They also make the following other payments during the year:

Rental of safe deposit box for securities	$120
Tax preparation fee (2014 Form 1040)	524
Jerry's union dues	1,200
Automobile registration	150

Attachment:- thevan_2011.zip