Milly Manpower, age 45, is single and has no dependents.  Her social security number is 987-65-4321.  Milly lives at 3000 Westcliffe Drive, Cedar City, Utah 84720

TAX RETURN 2 INSTRUCTIONS

CASE FACTS

 

Milly Manpower, age 45, is single and has no dependents.  Her social security number is 987-65-4321.  Milly lives at 3000 Westcliffe Drive, Cedar City, Utah 84720. She has no interest in contributing to any Presidential Election Campaign.  The following are her tax related items:

 

  1. Milly has a full-time job as a senior administrative assistant at Let’s Get To Work, Services, Inc. She earned a $60,000 salary from Let’s Go To Work, Inc.  They withheld federal income tax of $6,000 and state income tax of $4,000.
  2. Milly received a year end performance bonus from Let’s Go To Work, Inc. in the amount of $3,000.
  3. $600 of interest income from Wells Fargo Bank.
  4. $1,000 of interest income from Iron County Water District Bonds.
  5. $1,200 of ordinary dividends (not qualified) from her stock portfolio.
  6. Milly loaned her friend, Frank, $3,500 on July 1st two years ago. At the inception of the loan arrangement, Frank signed a promissory note.  He has repaid $500 of the loan.  On September 1st of the current year he declared bankruptcy.  Frank told Milly that he will be unable to make any further payments on the loan.  No Form 1099 was issued for the outstanding balance.
  7. Milly’s aunt passed away and left her $300,000 cash which Milly immediately invested in the stock market.
  8. For her birthday Milly’s grandmother gave her $2,000 in the form of a check.
  9. While passing through McCarren airport in Las Vegas Milly spend $25.00 on the slots. She ended up winning $350.
  10. Milly owns her own home. She received a 1098 from her bank showing that she paid $6,000 in interest expense and $4,500 in real property taxes.
  11. Milly donated $2,000 to her local church and gave $100 to the American Heart Association.
  12. Milly owns and operates Office Administration Services as a sole proprietor. She is a cash basis taxpayer. She is a material participant in the business.  She is not required to file any Forms 1099 for the business.  Milly had the following income and expenses from the business:
    1. Gross Receipts $18,000
    2. Office expenses $1,000
    3. Rents $8,000
    4. Supplies $2,000
    5. Payroll taxes $600
    6. Utilities $4,000
    7. Wages $6,000
    8. Estimated tax payments $1,200
  13. If Milly receives a federal income tax refund she will deposit it into her Wells Fargo checking account. Her routing number is 89898989 and her account number is 887886885. She does not want to authorize any person to discuss her tax return with the IRS.

 

REQUIREMENTS

 

Step 1.  Prepare Tax Formula Spreadsheet:

 

Please prepare a Tax Formula Spreadsheet using the tax information provided above and consistent with the following format:

 

Gross income (List gross income items not broad income, but actual taxable items)

– Deductions for AGI (list each above-the-line deduction, if any)

= AGI

– Deductions from AGI (Standard or Itemized (list each item) and Personal & Dependency Exemptions)

= Taxable Income

 

Tax (calculate the tax using the 2017 tax table found at IRS.gov)

– Federal Income Tax withheld & Estimated Tax Payments

= Amount Owed or Amount Overpaid

 

Step 2. Prepare tax return:

 

Complete the Federal income tax forms using 2017 forms. You will need the following forms:

 

1040 Individual Income Tax Return

Schedule A

Schedule C

Schedule D

Form 8949 Sales and other dispositions of capital assets

 

OTHER RULES:

 

  1. You are prohibited from using any tax software in completing this return.
  2. All forms can be found at www.is.gov.
  3. Submit this assignment through Canvas by the deadline indicated in Canvas.
  4. Submit all forms together as ONE document, not separate documents.
  5. You are permitted to work in groups or as an individual. If you work in a group, please have only one person submit for the entire group and be sure to list in Canvas Comments those who participated in the group.

Check Figures:

 

AGI $58,550

Taxable Income $37,875

Refund $1,985

 

Grading:

This tax return assignment is worth 100 points.  Each tax form is assigned a set number of points as listed below.  Grades are determined by taking the total number of points earned divided by total number of points available (100) multiplied by 100 points.

 

FORM                         POINTS AVAILABLE

Form 1040 page 1                      18

Form 1040 page 2                      18

Schedule A                                12

Schedule C                                 23

Schedule D page 1                       5

Schedule D page 2                       3

Form 8949                                 10

Tax Formula Spreadsheet         11

Total Points                            100

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