Reference no: EM132932226
Data Sheet for Final Project
Client Profile Bob Jones is a 60-year-old single man who has recently retired from IBM. He has $690,000 available in his 401(k) fund,and he is thinking of using that money to open a used car business that will be located at 210 Ocean View Drive in Pensacola, Florida.
Bob has estimated that the business might make $300,000 in taxable income. Bob's personal wealth-including investments in land, stocks, and bonds-is about $14,000,000. He reported an interest income of $20,000 and a dividend income of $6,000 last year. The $14,000,000 includes land worth $9,000,000 that Bob bought in 1996 for $450,000. Bob has hired your firm for professional advice regarding whether he should operate as a sole proprietor, a partnership, an S corporation, or a C corporation. He is also considering transferring a possible 40% interest in his new business to his daughter Mandy, who is 23 years old and single.
Other Considerations Bob has offered this info as possible deductions:
Mortgage Interest: $19,250
Charitable Contributions: $22,500
Medical Expenses:
Cosmetic nose job: $3,000o
Prescriptions: $1,710
Over-the-counter medicines: $285
Health insurance premiums: $5,800
Doctor visits: $1,140
Medical miles: 499
Real Estate Property Taxes: $8,000
Personal Property Taxes: $3,000
Credit Card Interest for Home Improvements: $1,800
Personal Legal Expenses: $5,000
Contribution to Major Political Party: $2,000
Miscellaneous Deductions:
Tax preparation feed (personal return): $500
Investment expenses: $3,100
You will recommend that Bob either takes a salary of $100,000 or a cash distribution of $180,000.
Assume no federal income taxes will be withheld. The $300,000net income already accounts for the salary expense Bob receives and the cash distribution, where applicable.
Additional Data
Business Tax ID #: 41-0000000
Business Name: Bob Jones Automotive Gallery
Land Purchased: January 2, 1996
Sale Date: September 15, 2018
Personal Tax ID #: 500-00-1004
Personal Address:o1234 Easy Street
Pensacola, FL 32581
Phone: 850-123-4567
In this assignment, you will submit drafts of completed tax forms for the client described in the project data sheet. You will submit these forms to support your client recommendations in the project.
Specifically,the following critical elements must be addressed:
Question A. Prepare the appropriate schedule(s)and tax form(s)for the recommended business entity.
Question B. Prepare the appropriate pages of Form 1040 including all relevant tax schedules and forms reflecting taxable income based on your calculations and the disposition of assets