Reference no: EM131296190
Problem -
Complete the following problem. YOU SHOULD NOT GIVE OR RECEIVE HELP FROM ANYONE.
George (12/24/1973) and Mary Bailey (6/29/1974) are married. They have two children remaining at home Zuzu (223-07-5439), (DOB 6/29/2006), and Harry (324-92-1765), DOB (1/4/1998) who is a full-time college student. They also had a cousin Clarence Bailey (213-34-5667) (DOB 9/6/1949) who stayed with them for five months while he was waiting for admission to flight school. Clarence's only income was Social Security of $5,400 and George and Mary provided 100% of his support while he was with them. Both George and Mary work for the building and loan his father founded. Their W-2's are included on the next page. The Bailey's have also assembled the following list of expenses:
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Doctors and pharmacy
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$ 3,185
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Asprin, Tylenol and Vitamins
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220
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Family Health Insurance (pretax)
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3,350
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Jacuzzi for George's aching back
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2,500
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(not prescribed)
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Crutches when Harry broke his leg in soccer
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139
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Dr. Alfred Bonebreak, MD medical fees
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900
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Anna Feline D.V.M. (treatment of Fluffy,
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the Bailey's cat)
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768
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Life insurance on George with Mary as beneficiary
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1,200
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Orville Payne, dentist (not covered by insurance)
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869
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Weight loss program for Mary (cosmetic purposes)
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180
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Spex Appeal Optometry exam (not covered by insurance)
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150
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Eyeglasses for Harry (not covered by insurance)
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235
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Medical mileage
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215 miles
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Property taxes for house
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2,500
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Property taxes on autos
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208
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Assessment for street repairs
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1,200
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Sales taxes
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785
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Mortgage interest
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8,950
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Home equity mortgage interest
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1,100
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Driver's license renewal for Mary
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32
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Fishing license for George
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12
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Interest on personal loan for vacation
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275
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Credit card interest
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945
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Charitable contributions Angel Church (cash)
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2,550
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Clothing donation to Salvation Army
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Cost $600, FMV $270
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Value of George's time volunteered to Boy Scouts
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300
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Mileage for charitable work
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143 miles
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Dues to Bedford Falls Country Club
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535
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Political contributions
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50
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Professional Banker's Association dues
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350
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Tax preparation fees
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475
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Safe deposit box (for bonds)
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40
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Meals bought by George while working late
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275
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On February 12, thieves broke into the Bailey's home. They were not insured against theft. They notified the police immediately. The following items were stolen:
A stereo which cost $1,400 when purchased December 17, 2014. Fair market value at the time of the theft was $600.
A computer which cost $2,198 when purchased January 15, 2014. Fair market value at the time of theft was $1,550 Silverware which cost $2,400 when purchased May 15, 2006. Fair market value at the time of theft was $4,500.
The Bailey's itemized deductions last year and received a refund from the state of North Carolina of $870. The Baileys paid college expenses for Harry who is in his first year at Bedford Falls University. They paid $3450 in tuition and fees, $700 in books, and $960 for a computer for Harry to take to college. Harry received a scholarship of $1200. George is also taking a course at AB Tech to improve his computer skills so he can work more efficiently. The cost of the computer course was $202 and books were $90.
George's father died during the year and left him $25,000 from the proceeds of a life insurance policy. The Baileys used it to fix up the old house they are living in. The Baileys paid child care for Zuzu $4,200 to Rose Petal Day Care (56-1223432) at 122 Old House Way, Bedford Falls 28802.
The Baileys had $270 in interest from an account they had at the Building and Loan and $167 interest from State of NC bonds. They had dividends of $398 from Disney, and $759 from Ghostbusters Corp. The dividends from Disney are qualified dividends. They each received a $25 gift certificate from Ingles as a holiday gift from the Savings and Loan. George also received $75 in jury duty pay. On an outing with her friends to Harrah's Cherokee Casino, Mary won $400. Her gambling losses amounted to $525. The Savings and Loan paid health insurance premiums for Mary and George of $7,638.
You should complete a 1040 along with all necessary schedules and forms. The return is due at the beginning of class on December 8th.
Attachment:- Assignment.rar
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