Tax Problem part $2.241$ Fall, $2024$ Term Project: Tax Return Preparation Jerry is Self Employed in his own private law practice J Smith Legal Consultancy, where he specializes in Personal Injury law. EIN: $55-5687541,$ Business code: $541110,$ Accounting method: $($Cash Basis, located at $245$ Greenwich St$.$ New York, NY $10006.$ The Revenue and Expenses from his law practice are as follows: Gross Revenue $-2023$ Salary Expense $-$ Professionals Rent $-($Tribecca Office$)$ Office Salaries Office Supplies Advertisement Utilities Telephone $/$Internet Accounting Fees Health Insurance $-$ Employees Office Maintenance Office Equipment $($see Note $1)$ Travel Expense $($see Note $2)$ Miscellaneous Payment $-$ Anti$-$Trust Treble Damages $($see Note $3)150,00070,00055,00011,0009,0008,00013,00012,00015,00025,00050,0003,0008,00090,000580,000$ Note $1-$ The category office equipment, includes printers, computers, fax machines, opercolators, phones, microwave, and office refrigerator. Jerry is unfamiliar with calculating tax depreciation and therefore requires your help. He is greatly concern with the tax benefits available for the costs incurred for office equipment. $($Hint: Should he capitalize and depreciate the equipment cost, or is there another more beneficial tax treatment?$)$ Note $2-$ Jerry visited Miami on a legal conference that was specific to his business. He spent a total of three days in Miami. However the conference was only for two days, but since Jerry loved the beach and the warm weather, he decided to stay another day. The total travel expenses incurred on the trip were $$3,000.$ Note $3-$ Jerry Smith, Attorney, was sued by the US government, regarding a criminal violation of the U$.$S$.$ Antitrust Laws. He entered a no$-$contest plea and paid the "Treble Antitrust Damage Fine"of $$90,000$ to settle the case. How much of the fine can Jerry deduct? Term Project: Tax Return Preparation Acc. $241$ Unreimbursed Job Related Expenses Roberta attended a Research Conference at Harvard Fall, $2024$ University during July, $2023.$ Her employer's practice is to reimburse their employees up to $52,00$ per conference. Her total expenses incured were $3,000$ however, she was only reimbursed $2,000$ as of December $31,2023.$ Roberta would like to deduct the unreimbursed expenses of Group Term Life Insurance CUNY $-$ Manhattan provided $$70,000$ of group term life $$1,000$ if possible? insurance to Roberta, $($age $48)$ who is not considered a key emplovee. $($Hint: Don't forget to consider its effect on gross income$).$ Retirement Contributions During $2023,$ Jerry Smith contributed $7,500$ to his Traditional IRA and Roberta Smith contributed $$6,500$ to her Roth IRA. They both would like to deduct their contributions. New York State Tax Refund Mr$.$ & Mrs$.$ Smith received a $1099$ for $$17,000$ representing a $2022$ NYS Tax Refund which was received in May, $2023.$ The Smith's itemized their deductions in $2022.$ Is the tax refund taxable in $2022?$ Capital Transactions Jerry sold the following securities during $2023$: Company Shares Selling Date sold Price IBM $2,000140,000$ BA $12/01/231,000155,000$ GE $06/12/231,00050,000$ AAPL $05/08/231,000$ Compute Net Capital Gain $/$ Net Cap Loss $95,00004/15/23$ Sale of Principal Residence $($see Note $4)$ Date of sale $11/01/23$ Date Acquired $07/06/96$ Selling Price $$1,400,000$ Adj. Basis Expense of sale $600,000$ Commission $34,00066,000$ Date Cost $/$ Gain$/$Loss Acquired Tax Basis $02/15/18200,000(60,000)$ L $02/21/1975,00006/15/2280,000$ L $30,0005/07/2220,000150,000($L$=$ Long term; S $=$ Short term$)(55,000)$ S Acc. $241$ Fall, $2024$ Prof Barry Cooper Term Project: Tax Return Preparation Note $4-$ Sale of Residence: Mr$.$ & Mrs$.$ Smith lived in this house for many years. They purchased the house in $1996$ at a cost of $$400,000$ and it was their principal residence. Over the years they made major improvements to their home and all capital improvements are documented Mr$.$ & Mrs$.$ Smith wish to avail themselves of the $$500,000$ gain exclusion under IRC Sec $121.$ Itemized Deductions $-$ Medical $$14,000$ Medical Insurance premiums $10,000($$$5,000$ H & $$5,000$ W$)$ Long Term Care Insurance $6,000$ Nike Exercise Machine $($see Note $5)20,000$ Doctor visits to MD$\text{'}$s$,$ & DDS$,8,000$ Prescription Drugs $3,250$ Travel Expenses $($see Note $6)$ Vitamins & Herbs for Mr$.$ & Mrs$.$ Smith $6,50015,200$ Visits to local Gypsies and Fortune$-$Tellers Medical Insurance reimbursements $12,500$ Note $5-$ Medical Expense: Jerry has weak muscles in his lower back. His personal physician Dr$.$ Adams MD$,$ prescribed a Nike Exercise Machine to try to alleviate the pain in his lower back. Note $6$ Travel Expenses: During Spring Break, Mrs$.$ Smith took a trip to Miami after being diagnosed by her medical doctor with extreme stress and fatigue. She hopes that the warm weather will alleviate the stress and bring her back to her normal condition. Taxes Paid See W$-2$ information on Page $2$ NYS & NYC Income Taxes $$15,200$ NYS Sales Taxes on purchase of Boat & Personal Living expenses $14,000$ NYC Real Estate