Question: Comprehensive Problem 1 - Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B. Noah and Joan Arc's Tax
Comprehensive Problem 1 - Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B.
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, 1984, and Joan was born on July 1, 1985. Both enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city of Dayton.Update: The final QBI deduction Regulations indicate that the SE tax deduction is to be incorporated into the computation of QBI.
1. The Arcs have two children, a son named Billie Bob (Social Security number 598-01-2345), born on March 21, 2012, and a daughter named Mary Sue (Social Security number 554-33-2411), born on December 3, 2015. They received a statement from Roundup Day Care Center (located on a separate tab) regarding the cost of child care provided for Mary Sue.
2. Joan and Noah brought a folder of tax documents (see Forms W-2 and 1098). In addition, they received a Substitute 1099 Statement from Charlotte Squab Financial Services (located on a separate tab) regarding their stock transactions for the year.
| a Employee's social security number 456-87-5432 | OMB No. 1545-0008 | Safe, accurate, FAST! Use | IRS e ~ file | Visit the IRS website at www.irs.gov/efile |
| b | Employer identification number (EIN) 33-4382966 | 1 | Wages, tips, other compensation 30,240.00 | 2 | Federal income tax withheld 5,120.00 | ||||||||
| c | Employer's name, address, and ZIP code City of Dayton Fire and Rescue 123 Warren Street Dayton, OH 45402 | 3 | Social security wages 30,240.00 | 4 | Social security tax withheld 1,874.88 | ||||||||
| 5 | Medicare wages and tips 30,240.00 | 6 | Medicare tax withheld 438.48 | ||||||||||
| 7 | Social security tips | 8 | Allocated tips | ||||||||||
| d | Control number | 9 | 10 | Dependent care benefits | |||||||||
| e | Employee's first name and initial | Last name | Suff. | 11 | Nonqualified plans | 12a | See instructions for box 12 | ||||||
| C o d e | DD | 12,200.00 | |||||||||||
| RECIPIENT'S/LENDER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. Chase Mortgage 100 Park Avenue New York, NY 10017 | OMB No. 1545-1380 2019 Form 1098 | Mortgage Interest Statement | |||
| 1 Mortgage interest received from payer(s)/borrower(s) $ 11,100.00 | Copy C For Recipient/ Lender For Privacy Act and Paperwork Reduction Act Notice, see the 2019 General Instructions for Certain Information Returns. | ||||
| RECIPIENT'S/LENDER'S TIN | PAYER'S/BORROWER'S TIN | 2 Outstanding mortgage principal $274,200.00 | 3 Mortgage origination date 03/13/2010 | ||
| 13-4296127 | 434-11-3311 | ||||
| 4 Refund of overpaid interest | 5 Mortgage insurance premiums | ||||
| PAYER'S/BORROWER'S name Noah and Joan Arc | $ | $ | |||
| The Arc 95-9876556 Income Statement For the Year Ended December 31, 2019 | ||||
| Revenue: | ||||
| Gross Sales | $143,245.00 | |||
| Less: Sales Returns and Allowances | 0.00 | |||
| Net Sales | $143,245.00 | |||
| Cost of Goods Sold: | ||||
| Beginning Inventory | $10,204.00 | |||
| Add: Purchases | 62,111.00 | |||
| $72,315.00 | ||||
| Less: Ending Inventory | 9,987.00 | |||
| Cost of Goods Sold | 62,328.00 | |||
| Gross Profit (Loss) | $80,917.00 | |||
| Expenses: | ||||
| Dues and Subscriptions | $0.00 | |||
| Estimated Federal Tax Payments | 8,000.00 | |||
| Estimated State Tax Payments | 4,000.00 | |||
| Insurance | 780.00 | |||
| Meals and Entertainment | 1,338.00 | |||
| Miscellaneous | 0.00 | |||
| Payroll Taxes | 3,840.00 | |||
| Professional Fees | 1,700.00 | |||
| Rent | 8,400.00 | |||
| Travel | 1,231.00 | |||
| Utilities | 1,254.00 | |||
| Vehicle Expenses | 0.00 | |||
| Wages | 25,113.00 | |||
| Total Expenses | 55,656.00 | |||
| Net Operating Income | $25,261.00 | |||
4. Detail of The Arc's meals and entertainment:
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5. Travel costs are business related and do not include meals.
6. Noah and Joan paid the following amounts during the year (all by check):
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7. Noah has a long-term capital loss carryover from last year of $2,400.
8. Noah and Joan own a condo and use it as a rental property. The condo is 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. On average, Noah spends about 2 hours per week on the rental activity. It was rented for 365 days. The revenue and expenses for the year are as follows:
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The home was acquired for $85,000 in 2003. No improvements have been made to the property.
9. The Arcs paid Ohio general sales tax of $976 during the year.
Substitute 1099 Statement from Charlotte Squab Financial Services
| Dividends | ||||||
| Payor | Box 1a Ordinary Dividends | Box 1b Qualified Dividends | Box 2a Capital Gain Distribution | Box 4 Federal Income Tax withheld | Box 7 Foreign Tax Paid | Box 11 Tax-exempt Dividends |
| ExxonMobil | 312.00 | 312.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Texas Util. | 1,188.00 | 1,188.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| CS Growth Fund | 418.00 | 418.00 | 245.00 | 0.00 | 19.00 | 0.00 |
| Stock Transactions | ||||
| Description | Date Acq. | Date Sold | Proceeds | Basis (reported to IRS) |
| 100 shs. Blue Corp. | 02/11/2009 | 08/15/2019 | 4,537.00 | 2,576.00 |
| 50 shs. Yellow Corp. | 01/13/2019 | 06/05/2019 | 6,090.00 | 5,345.00 |
| 25 shs. Red Co. | 10/02/2010 | 10/07/2019 | 12,212.00 | 1,655.00 |
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Require: Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B.
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