Reference no: EM13988349

Instructions You may complete the project individually or in a group of up to 3 students. If you choose to complete the project as part of a group, submit a single project for all members of the team. Be sure to list all team member names on the submission. Each student must fairly contribute to the project. Each team member is required to separately submit a team evaluation & self-assessment outlining each member’s contributions to the team. Prepare an income tax return (with all appropriate forms and schedules) for the Smiths for 2015 following these guidelines: Alice J. and Bruce M. Smith are married taxpayers who file a joint return. Their Social Security numbers are 123-45-6789 and 111-11-1111, respectively. Alice's birthday is September 21, 1968, and Bruce's is June 27, 1967. They live at 473 Pierre Avenue, Anytown, CA 91850. Alice is the office manager for Dowell Dental Clinic, 733 Some Street, Anytown, CA 91850 (employer identification number 12-7654321). Bruce is the manager of a Super Burgers fast-food outlet owned and operated by Mercury Corporation, 1247 University Avenue, Hauppauge, CA 11788 (employer identification number 11-1111111). The following information is shown on their Wage and Tax Statements (Form W–2) for 2015. Line Description Alice Bruce 1 Wages, tips, other compensation $58,000 $62,100 2 Federal income tax withheld 4,500 6,300 3 Social Security wages 58,000 62,100 4 Social Security tax withheld 3,596 3,850 5 Medicare wages and tips 58,000 62,100 6 Medicare tax withheld 841 900 15 State California California 16 State wages, tips, etc. 58,000 62,100 17 State income tax withheld 2,950 3,100 The Smiths provide over half of the support of their two children, Cynthia (born January 25, 1991, Social Security number 123-45-6788) and John (born February 7, 1995, Social Security number 123-45-6786). Both children are full-time students and live with the Smiths except when they are away at college. Cynthia earned $4,200 from a summer internship in 2015, and John earned $3,800 from a part-time job. Page 2 of 3 During 2015, the Smiths provided 60% of the total support of Bruce's widower father, Sam Smith (born March 6, 1939, Social Security number 123-45-6787). Sam lived alone and covered the rest of his support with his Social Security benefits. Sam died in November, and Bruce, the beneficiary of a policy on Sam's life, received life insurance proceeds of $800,000 on December 28. The Smiths had the following expenses relating to their personal residence during 2015: Property taxes $5,000 Qualified interest on home mortgage 8,700 Repairs to roof 5,750 Utilities 4,100 Fire and theft insurance 1,900 The Smiths had the following medical expenses for 2015: Medical insurance premiums $4,500 Doctor bill for Sam incurred in 2014 and not paid until 2015 7,600 Operation for Sam 8,500 Prescription medicines for Sam 900 Hospital expenses for Sam 3,500 Reimbursement from insurance company, received in 2015 3,600 The medical expenses for Sam represent most of the 60% that Bruce contributed toward his father's support. Other relevant information follows: • When they filed their 2014 state return in 2015, the Smiths paid additional state income tax of $900. • During 2015, Alice and Bruce attended a dinner dance sponsored by the Anytown Police Disability Association (a qualified charitable organization). The Smiths paid $300 for the tickets. The cost of comparable entertainment would normally be $50. • The Smiths contributed $6,000 to Anytown Presbyterian Church and gave used clothing (cost of $1,200 and fair market value of $350) to the Salvation Army. All donations are supported by receipts, and the clothing is in very good condition. • In 2015, the Smiths received interest income of $2,750, which was reported on a Form 1099–INT from Third National Bank. • In 2015, the Smiths received dividend income of $1,000. Of that amount, $750 are qualified dividends. • In December 2015, the Smiths’ dog knocked over a lit candle which caused damage to their living room. The Smiths paid a contractor $15,000 to make repairs but were not reimbursed for any of the damage by their insurance company. Page 3 of 3 • Alice's employer requires that all employees wear uniforms to work. During 2015, Alice spent $850 on new uniforms and $566 on laundry charges. • Bruce paid $400 for an annual subscription to the Journal of Franchise Management and $741 for annual membership dues to his professional association. • Neither Alice's nor Bruce's employer reimburses for employee expenses. • The Smiths do not keep the receipts for the sales taxes they paid and had no major purchases subject to sales tax. • All members of the Smith family had health insurance coverage for all of 2015. • Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce wants to designate $3 to the Presidential Election Campaign Fund.