Document Review Simulation $-$ Monica Montgomery $-$ SUMMER $2024$

Answer the $15$ items below on Canvas in the Document Review Simulation Summer $2024$ tab under Assignments. See your syllabus for the due date and time.

Based on the interview notes and the documents below, answer the following items relative to their ${2022}_{?}$ Form $1040.$ If the amount is negative, put a minus $(-)$ before the number. If the amount is zero, write $0.$ The parenthetical reference for each item below is to the $2022$ forms and schedules.

Wages, salaries, tips, etc. $($Form $1040,$ line $1$z$)$

Taxable IRA distribution $($Form $1040,$ line $4$b$)$

Business income or deductible loss $($Schedule $1,$ line $3)$ $$.$

Rental$/$royalty income or loss $($Schedule $1,$ line $5)$ $$.$

Taxable other income $($Schedule $1,$ line $9)$ $$.$

Educator expenses $($Schedule $1,$ line $11)$

Student loan interest deduction $($Schedule $1,$ line $21)$

Qualified business income deduction $(1040,$ line $13)$

Federal income tax withheld $($Form $1040,$ line $25$d$)$

Child tax credit $($Form $1040,$ line $19)$

Additional tax on IRA distribution $($Schedule $2,$ line $8)$

Dependent care credit $($Schedule $3,$ line $2)$

Most advantageous filing status $($Single$,$ SS$,$ MFJ$,$ or MFS$)$

Form required in order to split refund between accounts

Is tutoring business a specified service trade$/$business $($SSTB$)?$ YES$/$NO

Monica Montgomery $($DOB $02/14/1991,$ SSN $141-15-1515)$ was married to Mike Montgomery $($DOB $01/15/1985,$ SSN $141-16-6666),$ who passed away on February $2,2021.$ Their daughter, Emma Montgomery, $($DOB $01/21/2014,$ SSN $142-112222)$ has lived with Monica the entire $2022$ year and Monica paid more than half

$1$the cost of keeping up a home and support for Emma. They are all US citizens and have valid social security numbers $($SSNs$)$ and lived in the US the entire year.

Monica was a full$-$time high school teacher and purchased supplies for her class out of her own pocket totaling $$450.$ She received a $W-2$ G from the local casino, but also has documented gambling losses totaling $$7,100.$

Monica paid child and dependent care expenses for Emma while she worked.

She has provided you with documentation for her income and expenses $---$ see below. You also have obtained the following information from interviewing her:

INTERVIEW NOTES

In addition to being a high school teacher at Wilcox School District, Monica is also a self$-$employed college tutor. For the current year, she has documents to prove the following income and expenses:

Fees received for tutoring services $$21,900$

Business entertainment $of$ clients $(took$ them $to$ Astros game$)1,500$

Supplies expense $1,300$

Professional dues and subscriptions $1,200$

Business gifts $to25$ clients $($$$100$ Lalique vase $to$ each$)2,500$

Business computer purchased and put into service December $13,140$

Simplified method home office: $280$ square foot office $(1,800$ square foot home$)$

Total mileage on her car for $2022=11,213$ miles, of which $8,555$ were personal miles and the rest were business miles in going from client to client of the business miles were in the first half of the year, the rest were in the second half$).$ She has one vehicle, a $2020$ Ford F$-150,$ in service on $10/15/2021.$ Monica will take the standard mileage rate.

She would like to take the maximum allowable deduction for her expenses in the current year.

$2.$ Monica purchased a rent house on January $2$ of the current year for $$220,000($ $$160,000$ allocated to the structure and $$60,000$ allocated to the land$).$ The

$2$address is $100$ Drew Street, Houston, TX $77006.$ She immediately rented it and has the following income and expenses for the current year:

Rental income received $($ $$80012)$

$$9,600$

Mortgage payments $($interest $=$$$6,850,$ principal reduction $=$$$1,050)$

$7,900$

Real estate taxes

$2,520$

Maintenance expense

$920$

Homeowner's insurance

$1,850$

Repair expense

$1,360$

Monica actively participated in the management of the rent house but she does not qualify as a real estate professional. The rental activity is not a qualified trade$/$business for the QBI deduction.

$3.$ Monica received a distribution from her traditional IRA in January to pay for living expenses.

$4.$ Monica tells you in the interview that she received oil and gas royalties from High Society Petroleum Inc. She received a Form $1099-$MISC for $2022$ which she cannot find but has called the company and they confirmed the amount on line $2$ to be $$3,300.$ The property is not a working interest, but is fully depleted. She also has paid severance taxes of $$550$ and real estate taxes of $$64$ on the royalty property.

$5.$ Monica made timely quarterly tax payments for the