The following information is available for the Albert and Allison Gaytor family in addition to that provided in Chapters 1– 4. Albert and Allison received the following form:

Albert and Allison paid the following in 2018 (all by check or can otherwise be substantiated):

Contributions to Perpetual Perpetuity Catholic Church ...................................... $ 510
Tuition to Perpetual Perpetuity Catholic School for Crocker ............................. 6,000
Clothes to Salvation Army (10 bags in good condition) ........................................ 275
Contributions to George Kerry’s Congressional campaign ................................... 250
Psychotherapy for Allison ................................................................................................ 2,210
Prescription eyeglasses for Crocker ................................................................................ 364
Prescription medication and drugs ............................................................................. 1,850
Credit card interest ............................................................................................................ 1,345
Interest on Albert’s college loans ................................................................................. 3,125
Actual state sales tax (including sales tax on new auto of $2,000) ................. 3,102
Investment interest expense on stock margin account .......................................... 345
Auto loan interest reported on Form 1098 (not shown here; ............................. 860
auto was paid for by a home equity loan on residence)
Auto insurance ................................................................................................................... 1,600
Cosmetic surgery for Albert ........................................................................................... 4,500
Dave Deduction, CPA, for preparation of last year’s tax return .......................... 765
Safe-deposit box for storage of stocks and tax data .............................................. 100
Contribution to an educational savings account for Crocker ........................... 1,000
Home property taxes ....................................................................................................... 4,600
Unreimbursed business expense (seminar on dealing with ................................. 700
hijacking at sea)

In August 2018, Crocker was on an out-of-town field trip with the university band and his appendix burst. He required immediate surgery which was considered “out of network” for the Gaytor’s health plan resulting in hospital and doctor’s fees of $3,000 not covered by insurance. In addition, Allison drove 300 miles round trip to be with Crocker after the surgery and drive him home after he recovered. She spent two nights in a hotel at a cost of $140 per night.

In June, Albert purchased a new professional digital SLR camera for $7,950. While the Gaytors were on vacation in August, someone broke into their residence and stole the camera. Albert’s homeowners’ insurance did not reimburse him for any part of the loss since he declined the special premium add-on for high value items required by his policy.

For the 2018 tax year, on April 15, 2019, Albert contributes $5,500 to a traditional IRA for himself and $5,500 to a traditional IRA for his wife. He is not covered by a qualified retirement plan at work.

Albert managed to gather his gambling loss documentation and can substantiate gambling losses of $3,480 in 2018 (refer back to Chapter 2 for gambling winnings).

Required:

Combine this new information about the Gaytor family with the information from Chapters 1–4 and complete a revised 2018 tax return for Albert and Allison. Be sure to save your data input files since this case will be expanded with more tax information in later chapters.

Transcribed Image Text:

CORRECTED (if checked) *Caution: The amount shown may OMB No. 1545-0901 not be fully deductible by you. Limits based on the loan amount and the cost and value of the secured property may apply. Also, you may only deduct interest to the extent it was inourred by you, actually paid by you, and not reimbursed by another person. RECIPIENT'S/LENDER'S name, street address, city province, country, ZIP or foreign postal code, and telephone no. town, state or 2018 Mortgage Interest Vizcaya National Bank 9871 Coral Way Miami, FL 33134 Statement Form 1098 1 Mortgage interest received from payer(syborrower(s)" Copy B $ 10,900.00 2 Outstanding mortgage principal as of 1/1/2018 3 Mortgage origination date For Payer/ Borrower RECIPIENT'S/LENDER'S TIN PAYER'S/BORROWER'S TIN $ 316,721.87 03/01/2004 The information in boxes 1through 9 is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points, reported in boxes 1 and 6; or because you didn't report the refund of interest (box 4); or because you claimed a nondeductible item. 60-7654321 266-51-1966 4 Refund of overpaid interest 5 Mortgage insurance premiums $ 6 Points paid on purchase of principal residence PAYER'S/BORROWER'S name Albert and Allison Gaytor 2$ Street address (including apt. no.) 7 X If address of property securing mortgage is the same as PAYER'S/BORROWER'S address, the box is checked, or the address or description is entered in box 8. 12340 Cocoshell Road 8 Address or description of property securing mortgage (see instructions) City or town, state or province, country, and ZIP or foreign postal code Coral Gables, FL 33134 9 Number of properties securing the 10 Other mortgage Account number (see instructions) Form 1098 (Keep for your records) www.irs.gov/Form1098 Department of the Treasury - Internal Revenue Service