Dr. Ivan I. Incisor and his wife Irene are married and file a joint return for 2012.
Dr. Incisor is a dentist and he took 6 months off work to attend a cosmetic dentistry training program in 2012. His 2012 Form W-2 from his job at Bitewing Dental Clinic, Inc., showed the following:
Withholding (federal income tax) ...............................6,000
The Incisors have a 17-year-old son, Ira, who is enrolled in the eleventh grade at the Perpetual Perpetuity School. Ira's Social Security number is 690-99-9999. The Incisors also have an 18-year-old daughter, Iris, who is a part-time freshman student at Snow Mass Community College (SMCC). Iris' Social Security number is 899-99-9999. Iris is married to Sean Slacker (SS No. 896-33-0954), who is 19 years old and a part-time student at SMCC. Sean and Iris have a 1-year-old child, Seth Slacker (SS No. 648-99-4306). Sean, Iris, and Seth all live in an apartment up the street from Ivan and Irene during the entire current calendar year. Sean and Iris both work for Sean's wealthy grandfather as apprentices in his business. Their wages for the year were a combined $50,000, which allowed them to pay all the personal expenses for themselves and their son.
Ivan and Irene have savings account interest income of $380 from the Pacific Northwest Bank.
Use a computer software package to complete Form 1040 for Ivan and Irene Incisor for 2012. Be sure to save your data input files since this case will be expanded with more tax information in later chapters. Make assumptions regarding any information not given.
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...
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