Instructions Substitute 1099 Statement from Charlotte Squab Financial Services Roundup Day Care Center Statement Form 1040 Schedule 1 Schedule 2 Instructions X 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 Note: This problem is divided into three parts. You will need to complete some of the forms in the other parts in order to determine the amounts to be used on Form 1040. Some of the data information will be reproduced in the other parts for convenience. 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, 1986 and Joan was born on July 1, 1987. 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 Shem (Social Security number 598-01-2345), born on March 21, 2014, and a daughter named Nora (Social Security number 554-33-2411), born on December 3, 2017. They received a statement from Roundup Day Care Center (located on a separate tab) regarding the cost of child care provided for Nora. 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. 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 in the table below.Instructions Revenue: Gross Sales Less: Sales Returns and Allowances Net Sales 1 Cost of Goods Sold: Beginning Inventory Add: Purchases Less: Ending Inventory Cost of Goods Sold Gross Prot (Loss) Expenses: Dues and Subscriptions Estimated Federal Tax Payments Estimated State Tax Payments Insurance Meals and Entertainment Miscellaneous Eaxnolltaxes The Arc 95-9876556 Income Statement For the Year Ended December 31, 2021 $10,500.00 62,200.00 $72,700.00 10,100.00 4,000.00 3,900.00 3,950.00 1,500.00 3.3.00.0!) $144,000.00 $144,000.00 62,600.00 $81,400.00 Instructions Miscellaneous - Payroll Taxes 3,800.00 Professional Fees 1,700.00 Rent 8,400.00 Travel 1,250.00 Utilities 1,300.00 Vehicle Expenses - Wages 25,000.00 Total Expenses 54,800.00 Net Operating Income $26,600.00 4. Details of The Arc's meals and entertainment: Restaurant meals associated with business travel Arc employee holiday party Restaurant overtime meals for employees Sports tickets for entertaining large customers 5. Travel costs are business related and do not include meals. Instruotions 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): Political contributions Church donations (for which a written acknowledgment was received) Real estate taxes on their home Medical coapavs for doctor visits Mortgage interest for purchase of home (See Form 1098} Tax return preparation fees 350 Credit card interest 220 Automobile insurance premiums 600 Uniforms for Joan 125 Contribution to Noah's individual retirement account (made on , 4,000 Apnl 1, 2022) 7. Noah has a long-term capital loss carryover from last vear of $2,322. 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: Instruclions IUIIVIIJ- Rental income Insurance Interest expense Property taxes Miscellaneous expenses The home was acquired for $83,000 in 2005. On May 12, 2021, the Arcs installed new xtures {7-year recovery period) at a cost of 53,400. They wish to maximize the cost recovery on the new fixtures but make no elections. 9. The Arcs paid Ohio general sales tax of $1,076 during the year. 10. The Arcs received a $5,600 Economic Impact Payment (E1?) and $3,300 of advance child tax credit payments in 2021. Required: You are to prepare the Arcs' federal income tax return in good form. You are not to complete an Ohio state income tax return. The following forms and schedules are required and may be found in parts 1, 2, or 3: Part 1 Part 2 Part 3 Form 2441 Form 1040 Schedule C _ . (Only page 1 Is reqmred) Schedule 1 Schedule D Schedule E Schedule 2 Schedule 5E Form 4562 Qualied Dividends and Capital Schedule 3 _ Schedule 8812 6am Tax Worksheet Schedule A Form 8995 Schedule B Substitute 1099 Statement from Charlotte Squab Financial Services 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 Substitute 1099 Statement December 31, 2021 Dividends Box 1a Box 1b Box 4 Federal Box 7 Box 11 Tax- Ordinary Qualified Box 2a Cap Income Tax Foreign Tax exempt Payor Dividends Dividends Gain Distrib withheld Paid Dividends ExxonMobil 325.00 325.00 0.00 0.00 0.00 0.00 Texas Util. 1,210.00 1,210.00 0.00 0.00 0.00 0.00 CS Growth 395.00 395.00 260.00 0.00 30.00 0.00 FundStock Transactions Box 1a Box 1b Box 1c Box 1d Box le Box 2 Description Date Acq. Date Sold Net Proceeds Basis (reported to IRS) Character 100 shs. Blue Corp. 02/11/2011 08/15/2021 4,500.00 2,600.00 LT 50 shs. Yellow Corp. 01/13/2021 06/05/2021 6,200.00 5,400.00 ST 25 shs. Red Co. 10/02/2012 10/07/2021 12,200.00 1,700.00 LTRoundup Day Care Center Statement ROUNDUP DAY CARE CENTER 245 N. WILKINSON STREET DAYTON, OH 45402 January 12, 2022 Joan and Noah Arc 1265 W. Riverview Avenue Dayton, OH 45402 Dear Joan and Noah, Thank you for a great 2021 at Roundup! We appreciate your patronage during the year and hope to continue to provide excellent service for Nora in 2022. We have provided the tax information for calendar year 2021 below. Please let us know if you need any additional information. Sincerely, Charles F. Burgundian Charles F. Burgundian Executive Director, Roundup Day Care EIN 54-0983456 Date of service Amount Paid Child January 1, 2021 - December 31, 2021 $6,000.00 Nora Arc