Noah and Joan Arc’s Tax Return Noah and Joan Arc live with their family in Dayton, OH. Noah’s Social Security number is 434-11-3311. Noah was born on February 22, 1983 and Joan was born on July 1, 1984. Both enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city of Dayton. 

1. The Arcs have two children, a son named Billie Bob (Social Security number 598-01- 2345), born on March 21, 2011, and a daughter named Mary Sue (Social Security number 554-33-2411), born on December 3, 2014. 

2. Joan and Noah brought a folder of tax documents located on Pages D-3 to D-5. 

3. Noah’s pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is ‘‘The Arc,’’ and its taxpayer identification number is 95-9876556. Since you handle Noah’s bookkeeping, you have printed the income statement from your Quickbooks software, shown on Page D-5. 

4. Detail of The Arc’s meals and entertainment: 

Food costs for Arc holiday party...................250 

Meals associated with business travel...................400 

Overtime meals for employees...................50 

Sports tickets for entertaining large customers...................556 

Total...................$ 1,256 

5. Noah and Joan paid the following amounts during the year (all by check): 

Political contributions...............$ 250 

Church donations (for which a written acknowledgment was received)...............2,625

Real estate taxes on their home...............2,375 

Medical co-pays for doctor visits...............700 

Mortgage interest for purchase of home See Form 1098 (Page D-4) 

Tax return preparation fees...............350 

Credit card interest...............220 

Automobile insurance premiums...............600 

Uniforms for Joan...............125

6. Noah has a long-term capital loss carryover from last year of $2,375. 

7. Noah and Joan own rental property located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. Noah provides the management services for the rental including selection of tenants, maintenance, repairs, rent collection, and other services as needed. The revenue and expenses for the year are as follows: 

Rental income................$13,800 

Insurance................575 

Interest expense................6,870 

Property taxes................1,000 

Miscellaneous expenses................700 

Depreciation (the house was acquired in 1993)................3,000

8. All members of the Arc household were covered for the entire year under health care insurance through Joan’s employer. 

9. The Arcs paid Ohio general sales tax of $976 during the year. 

Required: 

You are to prepare their federal income tax return in good form, signing the return as the preparer. Do not complete an Ohio state income tax return. Make realistic assumptions about any missing data (addresses, etc.) that you may need. The following forms and schedules are required: 

Form 1040.................Schedule D 

Schedule 1.................Schedule E 

Schedule 3.................Schedule SE 

Schedule 4.................Form 2441 

Schedule 5.................Form 8812 

Schedule A.................Form 8949 

Schedule B.................Qualified Dividends and Capital Gain Tax Worksheet 

Schedule C.................Child Tax Credit Worksheet

Note: The forms included in Appendix D are provided for the student to work on only one of the two comprehensive problems. If desired, additional forms may be obtained from the IRS website at www.irs.gov. 

Transcribed Image Text:

a Employee's social security number 456-87-5432 Safe, accurate, FASTI Use Visit the IRS website at www.irs.gowlefile Rse+ file OMB No. 1545-0008 b Employer identification number EIN) 33-4382966 a Employer's name, address, and ZIP code 1 Wages, tips, other compensation 2 Federal income tax withheld 30,000.00 3 Social security wages 30,000.00 5,000.00 4 Social security tax withheld 1,860.00 City of Dayton Fire and Rescue 5 Medicare wages and tips 6 Medicare tax withheld 123 Warren Street 435.00 30,000.00 7 Social security tips 8 Allocated tips Dayton, OH 45402 d Control number 10 Dependent care benefits 9 Verification code e Employee's first name and initial Suff. 11 Nonqualified plans Last name 12a See instructions for box 12 DD | 12,200.00 13 Sattory ampioy Joan Arc Retireent plan Thind paty ick pay 12b 1265 W. Riverview Avenue 14 Other 120 Dayton, OH 45402 12d f Employee's address and ZIP code Employer's state ID number 15 State 16 State wages, Spa, ete. 17 State income tax 19 Local income tax 18 Local wages, tips, etc. 20 Locality name OH| 1126-87021 30,000.00 1,840.00 Department of the Treasury-Internal Revenue Service Wage and Tax Statement 2018 Fom W-2 Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service. Charlotte Squab Financial Services 123 Wall Street New York, NY 10005 Joan and Noah Arc 1265 W. Riverview Avenue Dayton, OH 45402 SSN: 456-87-5432 Date December 31, 2018 Dividends Вох 4 Вох 2а Cap Federal Income Вох 6 Foreign Вох 10 Тах- exempt Вох 1а Вох 1b Ordinary Dividends Qualified Dividends Gain Тах Tax Payor Distrib withheld Paid Dividends ExxonMobil 308.00 308.00 0.00 0.00 0.00 0.00 Texas Util. 1,220.00 1,220.00 0.00 0.00 0.00 0.00 CS Growth 320.00 320.00 212.00 0.00 18.00 0.00 Fund Substitute 1099 Statement