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David R. and Sherri N. Johnson [ages 45(1964) and 46(1963)] are married and live Casper, WY 82609. David is consulting engineer, while Betty is a paralegal. They file a joint return and use the cash basis for tax purposes. 1. Trained as a mining engineer, David has developed considerable expertise in the treatment and disposition of waste material. He also is well versed in the various Federal and state requirements for land reclamation projects. David maintains a consulting practice through which he renders advice on these matters. David’s business activity is 541990.Most of his clients are small and medium size owners and operators located in Wyoming and contiguous states( e.g Montana, Idaho, Utah). Characteristically, David is retained by a client on a contract fee basis and is reimbursed for all out-of-pocket expenses. In performing his service, David usually visits the job location and later submits his recommendations in written report along with statement for his services and expenses. David was paid the following amounts relating to the consulting practice in 2012: -Fees for services rendered $92,800 Airfare $8,200 Lodging $5,200 Meals $6,100 -Transportation (taxi,limo,rentals airports) $920 Expenses reimbursement $20,420 -Total received $113,220 2. The following fees for services rendered to mining companies are not included in the receipts listed in item 1 above: -Echo mining: Payment received January 2013; work done December 2012 – $5100 -Sesa mining: Payment received January 2012; work done December 2011 $4,400 -Cormorant Mining: No payment received; work done March 2012 $3700 David did not incur travel expenses in any of these engagements ( i, e the work was done in his office). As Cormorant Mining is in bankruptcy, David does not expect to collect any of this fee. 3. Other expenses paid by David in 2012 relating to his practice are summarized below: Advertising in trade journals $2,400 Office supplies(including drafting materials) $1,200 Contribution to H.R. 10(KEOGH) plan $9,000 State occupation license $300 Subscriptions to trade journals $240 Membership dues to trade associations $180 Landscape models(amount paid to a topographer for several land reclamation projects) $3,200 Business phone and internet service $860 Premiums on medical insurance (covering self, spouse, and dependants) $3,800 4. To save on rent and as a matter of convenience, David maintains an office in the home. Twenty percent of the 3,000-square-foot living area is devoted to the office. David inherited the home on Cody Way from his father, who died on June 6, 2003, when it had fair market value of $400,000 of which $40,000 was allocated to the land, and David began to using his home office the same year. The Johnsons moved into the home in 2003.It is current fair market value is $500,000 ($50,000 allocated to the land). County land records reflect that David’s father bought the land in 1969 for $6,000 and built the house in 1973 at cost of $60,000. David depreciates the business use of his home using the MACRS, treating the home as a 39-year nonresidential reality. Additional information regarding the property is listed below: Property/Casualty insurance $2,300 Repairs and maintenance $2,900 Utilities $4,800 The property taxes and mortgage interest on the property paid in 2012 are listed in item 15 below. In addition to the repairs and maintenance noted above David had office repainted at cost of $1,200. The furniture in the office, including business equipment( e.g computer, fax, machine, copier), was properly expensed in the year bought and has zero basis. However, on March 5, 2012, David purchased a heavy-duty, fire-resistant file cabinet with security-vault features for $ 4,800. He made the acquisition to safeguard and maintain the privacy of client data. If possible, David prefers to avoid capitalizing and depreciating the cabinet. 5. On February4, 2011, David purchased for $41,000 (including sales tax) for an Infiniti crossover SUV (gross weight under 6,000 pounds), which he uses 90% of the time for business. No trade-in was involved, and he did not claim any section 179 expensing of the cost. Under the actual operating cost method, he depreciates the SUV using MACRS (half-year convention). {hint; see table 3 in the instruction to form 4562} His operating expenses pertaining to the operation of the Infiniti for 2012 are as follows: Gasoline $3,300 Oil changes and lubrication $120 Auto insurance $ 1,600 Repairs $240 Auto club dues $180 License and registration $60 During business use, David received three moving traffic violations (total fines of $680) and incurred tolls and parking charges of $440. The Infiniti was driven a total of 14,500 miles during 2012( mileage was incurred evenly during the year). 6. Sherri is a licensed paralegal and is employed on part-time basis by several local attorneys. She commuted to work ( using the family Suburban) for a total of 813 miles and paid parking fees of $310. Her earnings and job-related expenses are summarized below: Salary(from four employers) $38,000 Subscriptions and dues to professional organizations $180 Laptop computer $1,200 Occupational license fee $80 Continuing education correspondence course $120 She purchased the laptop computer on March 12 and uses it about 80% of the time for business. The correspondence course is required for retention of her license. Sherri is considering going to law school, so she attend a series of LSAT preparation sessions at cost of $350. Because Sherri is a part-time employee, she is not covered by any of her employers medical or retirement plans. During 2012 however, she contributed $5,000 to a traditional IRA that she establish several years ago. As to the family Suburban, the Johnsons use the automatic mileage method for tax purposes. 7. With funds received from the settlement of his father’s estate, David purchased rental property at 4620 Cottonwood Land. Of the $250,000 purchases price, $30,000 was allocated to the land. After a substantial renovation to the house ( e.g new flooring, roof, heating unit) costing $80,000, the property was rented beginning February 1, 2006. In 2010, the Johnsons decides that their investment would be more marketable if the house was rented as furnished. Consequently, in May of that year they spent $38,000 on new furniture( including grapes, carpeting, and appliances). Under the current lease agreement, the property rents for $2,200 a month( payable at the beginning of each month) with utilities not included. Information regarding the property for 2012 appears below: Rent received $28,600 Property taxes $2,400 Property/Casual Insurance premium paid $3,100 Yard maintenance $1,200 Repairs $800 The amount of rent received included $2,200 for January 2013. Because the tenants were going on vacation during the Christmas/New Year holidays, in mid December they pre-paid the rent for next month. The property taxes listed above do not include a special assessment of $2,400 by the city of Casper for repaving the street in front of the property. Regarding depreciation, the Johnsons use MACRS to depreciate the rental home and the furnishings within it(assume half-year convention for the personalty). 8. As another investment, the Johnsons own 1,000 share stock in Cormorant Mining acquired on March 7,2011. David had performed services for the company late 2010 and submitted a bill for $3,900. Because Cormorant was experiencing a cash-flow problem, David accepted the stock as payment for such a services. Cormorant currently is in bankruptcy(see item 2 below) and expectations are that the shareholders will not recover anything on their stock investment. The stock is not publicly traded. 9. On March 10, 1994, David’s father gave the Johnsonss a tract of the land located in Tenton County (WY) as an anniversary present. It had a value of $150,000 and no gift tax was due on the transfer. The land had been purchased by David’s father on June 1, 1984, for $50,000. In December 2011 the Johnsons contracted by a real estate developer and offered $800,000 for the property. After considerable negotiation, the following transactions took place on March 4, 2012: the Johnsons transferred the Teton tract in return for $8,000 in cash and four city in Laramie WY worth $792,000. TheJohnsons considered the city lots to be a good investment as they are locate near the state university. All closing cost and legal fees were absorbed by the real estate developer. 10. One of the items David inherited from his father was an antique gun collection-mainly large caliber rifles used for buffalo hunting. Although David has no idea what his father’s cost basis was, the collection had a date of death value of $22,000. David sold it to a dealer for $29,000 on July 10,2012. 11. On July 12, 1998, using $50,000 of fund she had received from an aunt’s life insurance policy, Sherri purchased grazing land in Converse Country WY. On August 2, 2011, she sold the land to a local rancher for $75,000. Under the terms of the sale, Sherri received a down payment of $15,000 and 10 annual notes of $6,000 each. Sherri is also to receive Simple interest of 8% on outstanding balance principle each year.. On August 4, 2012, Sherri collected $10,800 (including interest of $4,800) on the maturity of the first note. 12. Although the Johnsons had several Schedule D transaction during 2011, they end up with a net short-term capital loss of $7,000. Of this loss $3,000 was deducted in 2011 and $4000 carried over to 2012. 13. For several years, Sherris’s widowed mother, Vivian Olson, has lived with the Johnsons and has been claimed by them as a dependent. On December 30,2011 Vivian suffered a heart attack. After six days in the ICU of local hospital, Vivian died. In early February 2012, the Johnsons paid the following expenses regarding Vivian: Medical expenses incurred in 2011 $4,200 Medical expenses incurred in 2012 $3,100 Burial expenses $4,400 Remainder of church pledge for 2012 $600 Fortunately, the balance of Vivian’s medical expenses ($11,900) was covered by insurance. Besides personal and household effects, Vivian’s major assetwas life insurance. As the designated beneficiary of the policy, Sherri was paid the $20,000 proceeds on March 13,2012 14. Besides the items already mentioned, the Johnsons had the following receipts during 2012: -Interest income City of Cheyenne general purpose bonds $1,900 CD at Wells Fargo Bank $1,100 Money market account at Bank of America $400 Qualified dividend income issued on Meadowlark Corporation common stock $700 Jury duty fees $420 Yard (garage)sale $950 In connection with her jury duty assignment in June, Sherri drove Suburban 40 miles and incurred expenses of $30 for parking and $45 for meals. The yard sale involved used furniture, appliances, books, toys, and other household goods having an estimated original cost value of $1,800. 15. In addition to the items already noted, the Johnsons had the following expenditures for 2012: Medical and dental dills(including prescription drugs of $400) Other than those relating to Vivian (see item13) $1,800 Ad valorem property taxes on personal residence $3,100 Interest on home equity loan used to finance the purchase of personal items (e.g camper) $4,400 Charitable contributions (not include Vivian’s pledge) $3,200 The Johnsons drove the Suburban 420 miles to various medical and dental appointments. Wyoming has a no state or local income tax but does imposes an additional local sales tax of 1%. Although they do not keep track of their sales taxes, they purchased a camper for $40,000 in May 2012. The sales tax ont his purchase was $1,600. 16. Besides Vivian (see item13) the Johnsons household include two daughters, Meredith (age19) and Kirby (age18) and son Toby (age17). Kirby and Toby are full -time students in highschool. Meredith graduate a year ago and works part-time earned $9,000 during 2012 which she deposits in a saving account. 17. For tax year 2011 the Johnsons had an overpayment of $150 which they applied toward their 2012 income tax. Sherri’s income tax withholdings for the year are $5,100 and the Johnsons made quarterly payments of $4,000 (for a total of $16,000). Use the business activity code of 541990 again. 18. Relevant Social Security numbers are noted below David R. johnsonNNN-NN-NNNN/span> Sheri Johnson-NNN-NN-NNNN/span> Vivial Olson- 123-45-6786 Meredith Johnson – 123-45-6787 Kirby Johnsons 123-45-6788 Toby Johnson- 123-45-6789 Requirements; -Prepare an income tax return (with appropriate schedules) for the johnsons for 2012. -Make necessary assumptions for information not given in the problem but needed to complete the return. -If any refund is due, apply it toward next year’s taxes -the Johnsons do not wish to contribute to the Presidential election campaign fund. I know that the total income is 128,139 The AGI is 105,343 Itemized deductions are 13,627 Taxable income is 72716 Tax (line 61) is 18008 And refund is 3242.

David R. and Sherri N. Johnson [ages 45(1964) and 46(1963)] are married and live Casper, WY 82609. David is consulting engineer, while Betty is a paralegal. They file a joint return and use the cash basis for tax purposes.

 

1. Trained as a mining engineer, David has developed considerable expertise in the treatment and disposition of waste material. He also is well versed in the various Federal

and state requirements for land reclamation projects. David maintains a consulting practice through which he renders advice on these matters. David’s business activity is 541990.Most of his clients are small and medium size owners and operators located in Wyoming and contiguous states( e.g Montana, Idaho, Utah). Characteristically, David is retained by a client on a contract fee basis and is reimbursed for all out-of-pocket expenses. In performing his service, David usually visits the job location and later submits his recommendations in written report along with statement for his services and expenses.

David was paid the following amounts relating to the consulting practice in 2012:

-Fees for services rendered $92,800

Airfare $8,200

Lodging $5,200

Meals $6,100

 

-Transportation (taxi,limo,rentals airports) $920

 

Expenses reimbursement $20,420

 

-Total received $113,220

2. The following fees for services rendered to mining companies are not included in the receipts listed in item 1 above:

 

-Echo mining: Payment received January 2013; work done December 2012 – $5100

 

-Sesa mining: Payment received January 2012; work done December 2011 $4,400

 

-Cormorant Mining: No payment received; work done March 2012 $3700

 

David did not incur travel expenses in any of these engagements ( i, e the work was done in his office). As Cormorant Mining is in bankruptcy, David does not expect to collect any of this fee.

3. Other expenses paid by David in 2012 relating to his practice are summarized below:

 

Advertising in trade journals $2,400

Office supplies(including drafting materials) $1,200

Contribution to H.R. 10(KEOGH) plan $9,000

State occupation license $300

Subscriptions to trade journals $240

Membership dues to trade associations $180

Landscape models(amount paid to a topographer for several land reclamation projects) $3,200

 

Business phone and internet service $860

Premiums on medical insurance (covering self, spouse, and dependants) $3,800

 

 

4. To save on rent and as a matter of convenience, David maintains an office in the home. Twenty percent of the 3,000-square-foot living area is devoted to the office. David inherited the home on Cody Way from his father, who died on June 6, 2003, when it had fair market value of $400,000 of which $40,000 was allocated to the land, and David began to using his home office the same year. The Johnsons moved into the home in 2003.It is current fair market value is $500,000 ($50,000 allocated to the land). County land records reflect that David’s father bought the land in 1969 for $6,000 and built the house in 1973 at cost of $60,000. David depreciates the business use of his home using the MACRS, treating the home as a 39-year nonresidential reality. Additional information regarding the property is listed below:

Property/Casualty insurance $2,300

Repairs and maintenance $2,900

Utilities $4,800

 

 

 

The property taxes and mortgage interest on the property paid in 2012 are listed in item 15 below.

 

In addition to the repairs and maintenance noted above David had office repainted at cost of $1,200. The furniture in the office, including business equipment( e.g computer, fax, machine, copier), was properly expensed in the year bought and has zero basis. However, on March 5, 2012, David purchased a heavy-duty, fire-resistant file cabinet with security-vault features for $ 4,800. He made the acquisition to safeguard and maintain the privacy of client data. If possible, David prefers to avoid capitalizing and depreciating the cabinet.

 

5. On February4, 2011, David purchased for $41,000 (including sales tax) for an Infiniti crossover SUV (gross weight under 6,000 pounds), which he uses 90% of the time for business. No trade-in was involved, and he did not claim any section 179 expensing of the cost. Under the actual operating cost method, he depreciates the SUV using MACRS (half-year convention). {hint; see table 3 in the instruction to form 4562} His operating expenses pertaining to the operation of the Infiniti for 2012 are as follows:

Gasoline $3,300

Oil changes and lubrication $120

Auto insurance $ 1,600

Repairs $240

Auto club dues $180

License and registration $60

During business use, David received three moving traffic violations (total fines of $680) and incurred tolls and parking charges of $440. The Infiniti was driven a total of 14,500 miles during 2012( mileage was incurred evenly during the year).

 

6. Sherri is a licensed paralegal and is employed on part-time basis by several local attorneys. She commuted to work ( using the family Suburban) for a total of 813 miles and paid parking fees of $310. Her earnings and job-related expenses are summarized below:

Salary(from four employers) $38,000

Subscriptions and dues to professional organizations $180

Laptop computer $1,200

Occupational license fee $80

Continuing education correspondence course $120

She purchased the laptop computer on March 12 and uses it about 80% of the time for business. The correspondence course is required for retention of her license. Sherri is considering going to law school, so she attend a series of LSAT preparation sessions at cost of $350. Because Sherri is a part-time employee, she is not covered by any of her employers medical or retirement plans. During 2012 however, she contributed $5,000 to a traditional IRA that she establish several years ago. As to the family Suburban, the Johnsons use the automatic mileage method for tax purposes.

 

 

7. With funds received from the settlement of his father’s estate, David purchased rental property at 4620 Cottonwood Land. Of the $250,000 purchases price, $30,000 was allocated to the land. After a substantial renovation to the house ( e.g new flooring, roof, heating unit) costing $80,000, the property was rented beginning February 1, 2006. In 2010, the Johnsons decides that their investment would be more marketable if the house was rented as furnished. Consequently, in May of that year they spent $38,000 on new furniture( including grapes, carpeting, and appliances). Under the current lease agreement, the property rents for $2,200 a month( payable at the beginning of each month) with utilities not included. Information regarding the property for 2012 appears below:

 

Rent received $28,600

Property taxes $2,400

Property/Casual Insurance premium paid $3,100

Yard maintenance $1,200

Repairs $800

 

The amount of rent received included $2,200 for January 2013. Because the tenants were going on vacation during the Christmas/New Year holidays, in mid December they pre-paid the rent for next month. The property taxes listed above do not include a special assessment of $2,400 by the city of Casper for repaving the street in front of the property. Regarding depreciation, the Johnsons use MACRS to depreciate the rental home and the furnishings within it(assume half-year convention for the personalty).

 

 

 

8. As another investment, the Johnsons own 1,000 share stock in Cormorant Mining acquired on March 7,2011. David had performed services for the company late 2010 and submitted a bill for $3,900. Because Cormorant was experiencing a cash-flow problem, David accepted the stock as payment for such a services. Cormorant currently is in bankruptcy(see item 2 below) and expectations are that the shareholders will not recover anything on their stock investment. The stock is not publicly traded.

 

 

 

9. On March 10, 1994, David’s father gave the Johnsonss a tract of the land located in Tenton County (WY) as an anniversary present. It had a value of $150,000 and no gift tax was due on the transfer. The land had been purchased by David’s father on June 1, 1984, for $50,000. In December 2011 the Johnsons contracted by a real estate developer and offered $800,000 for the property. After considerable negotiation, the following transactions took place on March 4, 2012: the Johnsons transferred the Teton tract in return for $8,000 in cash and four city in Laramie WY worth $792,000. TheJohnsons considered the city lots to be a good investment as they are locate near the state university. All closing cost and legal fees were absorbed by the real estate developer.

 

10. One of the items David inherited from his father was an antique gun collection-mainly large caliber rifles used for buffalo hunting. Although David has no idea what his father’s cost basis was, the collection had a date of death value of $22,000. David sold it to a dealer for $29,000 on July 10,2012.

 

11. On July 12, 1998, using $50,000 of fund she had received from an aunt’s life insurance policy, Sherri purchased grazing land in Converse Country WY. On August 2, 2011, she sold the land to a local rancher for $75,000. Under the terms of the sale, Sherri received a down payment of $15,000 and 10 annual notes of $6,000 each. Sherri is also to receive Simple interest of 8% on outstanding balance principle each year.. On August 4, 2012, Sherri collected $10,800 (including interest of $4,800) on the maturity of the first note.

 

12. Although the Johnsons had several Schedule D transaction during 2011, they end up with a net short-term capital loss of $7,000. Of this loss $3,000 was deducted in 2011 and $4000 carried over to 2012.

13. For several years, Sherris’s widowed mother, Vivian Olson, has lived with the Johnsons and has been claimed by them as a dependent. On December 30,2011 Vivian suffered a heart attack. After six days in the ICU of local hospital, Vivian died. In early February 2012, the Johnsons paid the following expenses regarding Vivian:

 

Medical expenses incurred in 2011 $4,200

Medical expenses incurred in 2012 $3,100

Burial expenses $4,400

Remainder of church pledge for 2012 $600

 

 

 

Fortunately, the balance of Vivian’s medical expenses ($11,900) was covered by insurance. Besides personal and household effects, Vivian’s major assetwas life insurance. As the designated beneficiary of the policy, Sherri was paid the $20,000 proceeds on March 13,2012

 

14. Besides the items already mentioned, the Johnsons had the following receipts during 2012:

 

-Interest income

City of Cheyenne general purpose bonds $1,900

CD at Wells Fargo Bank $1,100

Money market account at Bank of America $400

Qualified dividend income issued on

Meadowlark Corporation common stock $700

 

Jury duty fees $420

Yard (garage)sale $950

 

In connection with her jury duty assignment in June, Sherri drove Suburban 40 miles and incurred expenses of $30 for parking and $45 for meals. The yard sale involved used furniture, appliances, books, toys, and other household goods having an estimated original cost value of $1,800.

 

15. In addition to the items already noted, the Johnsons had the following expenditures for 2012:

Medical and dental dills(including prescription drugs of $400)

Other than those relating to Vivian (see item13) $1,800

Ad valorem property taxes on personal residence $3,100

Interest on home equity loan used to finance the purchase of personal items (e.g camper) $4,400

 

Charitable contributions (not include Vivian’s pledge) $3,200

 

The Johnsons drove the Suburban 420 miles to various medical and dental appointments. Wyoming has a no state or local income tax but does imposes an additional local sales tax of 1%. Although they do not keep track of their sales taxes, they purchased a camper for $40,000 in May 2012. The sales tax ont his purchase was $1,600.

 

16. Besides Vivian (see item13) the Johnsons household include two daughters, Meredith (age19) and Kirby (age18) and son Toby (age17). Kirby and Toby are full

-time students in highschool. Meredith graduate a year ago and works part-time earned $9,000 during 2012 which she deposits in a saving account.

17. For tax year 2011 the Johnsons had an overpayment of $150 which they applied toward their 2012 income tax. Sherri’s income tax withholdings for the year are $5,100 and the Johnsons made quarterly payments of $4,000 (for a total of $16,000).

 

Use the business activity code of 541990 again.

 

18.

 

Relevant Social Security numbers are noted below

 

David R. johnsonNNN-NN-NNNN/span>

Sheri Johnson-NNN-NN-NNNN/span>

Vivial Olson- 123-45-6786

Meredith Johnson – 123-45-6787

Kirby Johnsons 123-45-6788

Toby Johnson- 123-45-6789

 

 

 

Requirements;

-Prepare an income tax return (with appropriate schedules) for the johnsons for 2012.

-Make necessary assumptions for information not given in the problem but needed to complete the return.

-If any refund is due, apply it toward next year’s taxes

-the Johnsons do not wish to contribute to the Presidential election campaign fund.

 

I know that the total income is 128,139

The AGI is 105,343

Itemized deductions are 13,627

Taxable income is 72716

Tax (line 61) is 18008

And refund is 3242.

Interested in a PLAGIARISM-FREE paper based on these particular instructions?...with 100% confidentiality?

Order Now