Kent Pham, CPA, is a 45-year-old single taxpayer living at 169 Trendie Street, La Jolla, CA 92037. His Social Security number is 865-68-9635. In 2012, Kent's W-2 as the controller of a local corporation showed the following:
Earnings from the Gentry Hotel.......................................$350,000
Federal income tax withheld..............................................90,000
State income tax withheld.................................................30,000
Kent's other income includes interest from GMAC bonds of $3,250 and interest on CDs at The Cove Bank of $4,145. Also, Kent received tax-exempt interest of $37,960 on private activity bonds that is subject to alternative minimum tax. During the year, Kent paid the following amounts (all of which can be substantiated):
Home mortgage interest...........................................................$42,210
Home equity debt interest on loan used to purchase a Lexus...................6,800
Credit card interest....................................................................2,280
California annual auto registration tax (deductible portion) ......................770
Auto insurance........................................................................1,170
State income taxes paid in 2012 (for 2011) .....................................16,302
Property taxes on personal residence...............................................8,060
Blue Cross premiums.................................................................2,340
Other medical expenses..............................................................1,025
CPA fees paid to handle 2008 IRS audit..........................................9,100
Charitable contributions:
Tree-huggers Historical Society (a qualified charity)............................1,040
Campanile Educational (a qualified charity).....................................12,000
Tecate´ Orphanage (a Mexican organization).......................................500
Required:
Complete Kent's federal tax return for 2012. Use Form 1040, Schedule A, Schedule B, Form 6251, and any other appropriate schedule(s) you need on pages 6-53 through 6-58. Make realistic assumptions about any missing data.