You will be using federal tax law applicable for the 2016 tax year. Therefore, I have included the 2016 forms where possible. In some cases, you have been provided 2017 forms and schedules. Please consider these 2017 forms to be 2016, even if they do not state this year. You will not be preparing the California tax return. You will only prepare the federal tax return. The taxpayer facts: Kesha’s social security number is 112-11-1112 and her date of birth is 2/2/1970. They live at 321 Second Street Santa Barbara, CA 93103 Wednesday, November 29 The return is due by the beginning of your scheduled class on December 6. This may be turned in on paper at or before 5pm in class, or it may be submitted via GauchoSpace at or before 5pm. Tyson and Kesha Miller are married and filing a joint return. Tyson’s social security number is 123-45-6789 and his date of birth is 1/1/1966. They have two children as their dependents: Sean Miller (SSN:212-22-2222) whose date of birth is 3/5/1993. He is a student. Their second child is Alaina Miller (SSN:211-11- 1122) whose date of birth is 3/1/2006. Tyson is an engineer and works for a large aerospace company. Kesha is an elementary school teacher at a local public school. Tyson and Kesha have the following income from employment, as shown on their W-2’s: Wages, Tips and other compensation $80,000 $40,000 Federal Income Tax Withheld $12,000 $6,000 Social Security Wages $80,000 $40,000 Social Security Tax Withheld $4,960 $2,480 Medicare Wages $80,000 $40,000 Medicare Tax Withheld $1,160 $580 California Withholdings $3,000 $1,500 During 2016, Tyson and Kesha received the following interest, dividends, and stock transactions: • Kesha received $2,700 of interest from Trustmark National Bank. • • • Tyson has an E-trade account. In it, he purchased and sold stocks as follows: Tyson and Kesha had a joint savings account and received $1,000 of interest from Chase Bank. They have an investment account at TD Ameritrade. As of 12/31/2016, TD Ameritrade sent them a Form 1099 showing ordinary dividends of $2,000 and qualified dividends of $1,750. Stock No of Shares Date Purchased Date Sold Per Share Cost Per Share Selling Price Blue 100 1/18/08 1/12/16 $80 $74 Green 50 1/11/03 8/10/16 $127 $157 Purple 120 1/1/16 2/1/16 $60 $30 Tyson and Kesha own a single-family rental unit at 456 Third Street, Santa Barbara, CA 93103. They experienced the following receipts and disbursements: • Rental income - $27,000 • Water/trash – ($960) • Gardening – ($1,200) • Property tax – ($5,750) • Mortgage interest – ($16,610) • Property manager – ($985) • Repairs and maintenance – ($1,370) Other expense related to the rental property is $9,091 in depreciation Tyson contributed $5,000 to his retirement plans (Individual IRA). He also paid $1,200/month as alimony to his ex-wife. During 2016, Tyson and Kesha paid the following: • • • • $3,300 to their Santa Barbara Community Church • $4,800 to Goleta Presbyterian Church $257 paid to DMV for Tyson’s vehicle license fee, and $182 paid to DMV for Kesha’s vehicle license fee $4,550 for doctors’ bills, $500 for medical prescriptions, and $4,380 for medical premiums $7,550 of the mortgage interest, $3,210 for property tax, $3,810 for utilities, and $2,290 for fire and theft insurance for their principal house Tyson and Kesha gave used clothing (cost of $1,100 and fair market value of $450) to the Salvation Army. All donations are supported by receipts and are in very good condition. During 2016, Tyson and Kesha attended a dinner dance sponsored by the Goleta Police Disability Association (a qualified charitable) organization. The Millers paid $400 for the tickets. The cost of comparable entertainment would normally be $160. During 2016, Kesha attended a seminar related to her job as a teacher. Yet the school district did not reimburse the travel expense of $1,250 and cost of the seminar of $900. She also paid $250 in unreimbursed school supplies for her classroom during the year. The Millers paid an income tax preparation fee of $850 (paid in May 2016 for 2015 return). Tyson’s Engineers Society dues and state license cost him $1,150. When they filed their 2015 state return in 2016, the Millers paid additional state income

Answer rating: 100% (QA)

tax of 2 500 The Mill ers also paid 5 000 of State of California franchise tax in 2016 Form 10 40 To begin the return a Form 10 40 needs to be completed for Tyson and Kes ha Miller The first step is t... View the full answer