Week 5: Comprehensive Case Study 2

Steve Jackson (birthdate December 13, 1965) is a single taxpayer living at 3215 Pacific Dr., Del Mar, CA 92014. His Social Security number is 465-88-9415. In 2017, Steves earning and income tax withholding as the manager of a local hotel are:

Earnings from the Ocean View Hotel $121,500

Federal income tax withheld 18,500

State Income tax withheld 9,300

Steves other income includes interest from General Electric bonds of $2,550 and interest on a savings account at Wells Fargo Bank of $3,215. Also, Steve received tax-exempt interest of $29,440 on private activity bonds that is subject to alternative minimum tax. Steve had full medical coverage for the entire tax year.

During the year, Steve paid the following amounts (all of which can be substantiated):

Home mortgage interest $31,575

Credit card interest 1,760

Auto insurance 900

State income taxes paid in 2016 (for 2014 audit) 12,600

Property taxes on personal residence 6,200

Kaiser HMO premiums 4,800

Other medical expenses 790

CPA fees paid to handle 2014 state audit 7,000

Charitable contributions

Girl Scouts 800

San Diego State University (contribution) 10,000

Italian Red Cross 250

Required: Complete Steves federal tax return for 2017. Use Form 1040, Schedule A, Schedule B, and Form 6251, which can be found on the IRS website. Make realistic assumptions about any missing data.