Appendix C: Additional Comprehensive Tax Return Probl 611364
Cappendix Cten Additional Comprehensive Tax Return Problemscovering I
C appendix C Ten additional Comprehensive Tax Return problems—covering individual, corporation, partnership, and S corporation tax returns—can be found in the Connect Library. INDIVIDUAL TAX RETURN PROBLEM 1 Required: Use the following information to complete Keith and Jennifer Hamilton’s 2017 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Form 1040, supporting schedules, and instructions to the forms and schedules can be found at the IRS website ( Facts: 1. Keith Hamilton is employed as an airline pilot for Flyby Airlines in Las Vegas, Nevada. Jennifer is employed as a teacher’s assistant at Small World Elementary School, in Henderson, Nevada. Keith and Jennifer live in a home they purchased this year. Keith and Jennifer have three children who lived with them all year, Joshua (17), Danielle (14), and Sara (10). Keith and Jennifer provided the following personal information: Keith and Jennifer do not want to contribute to the presidential election campaign. Keith and Jennifer do not claim itemized deductions. Keith and Jennifer live at 3678 Blue Sky Drive, Henderson, Nevada 89052. Keith’s birthday is 10/12/1972 and his Social Security number is . Jennifer’s birthday is 7/16/1975 and her Social Security number is . Joshua’s birthday is 6/30/2000 and his Social Security number is . Danielle’s birthday is 8/12/2003 and her Social Security number is . Sara’s birthday is 5/13/2007 and her Social Security number is . Keith received the following Form W-2 for 2017 from Flyby Airlines. Jennifer received the following Form W-2 for 2017 from Small World Elementary School. During 2017, Keith and Jennifer received $550 in interest from Las Vegas municipal bonds, $1,070 interest from U.S. Treasury bonds, and $65 from their savings account at SCD Credit Union. Keith and Jennifer are joint owners of the Las Vegas city bonds and the U.S. Treasury bonds. They have a joint savings account at SCD Credit Union. On January 21, 2017, Jennifer was involved in a car accident. Because the other driver was at fault, the other driver’s insurance company paid Jennifer $1,350 for medical expenses relating to her injuries from the accident and $300 for emotional distress from the accident. She received payment on March 15, 2017. Keith’s father died on November 15, 2016. Keith received a $100,000 death benefit from his father’s life insurance policy on February 8, 2017. On February 15, 2017, Keith hurt his arm on a family skiing trip in Utah and was unable to fly for two weeks. He received $4,000 for disability pay from his disability insurance policy. He received the check on March 2, 2017. Flyby Airlines paid $600 in premiums on this policy during 2017. The disability insurance policy premiums are paid for by Flyby Airlines as a fully taxable fringe benefit to Keith (the premiums paid on his behalf are included in Keith’s compensation amount on his W-2). Jennifer’s grandmother died on March 10, 2017, leaving Jennifer with an inheritance of $30,000. (She received the inheritance on May 12, 2017.) Flyby Airlines had space available on its Long Island, New York, flight and provided Keith, Jennifer, and their three children with free flights so they could attend the funeral. The value of the ticket for each passenger was $600. On April 1, 2017, Jennifer slipped in the Small World Elementary lunchroom and injured her back. Jennifer received $1,200 in worker’s compensation benefits because her work-related injury caused her to miss two weeks of work. She also received a $2,645 reimbursement for medical expenses from the health insurance company. Small World Elementary pays the premiums for Jennifer’s health insur- ance policy as a nontaxable fringe benefit. On May 17, 2017, Keith and Jennifer received a federal income tax refund of $975 from their 2016 federal income tax return. On June 5, 2017, Keith and Jennifer sold their home in Henderson, Nevada, for $510,000 (net of commissions). Keith and Jennifer purchased the home 11 years ago for $470,000. On July 12, 2017, they bought a new home for $675,000. On July 25, 2017, Keith’s aunt Beatrice gave Keith $18,000 because she wanted to let everyone know that Keith is her favorite nephew. On September 29, 2017, Jennifer won an iPad valued at $500 in a raffle at the annual fair held at Joshua’s high school. Keith and Jennifer have qualifying insurance for purposes of the the Affordable Care Act (ACA). INDIVIDUAL TAX RETURN PROBLEM 2 Required: Use the following information to complete Johnelle and Latoya Henry’s 2017 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. You may need the following forms to complete the project: Form 1040 and Schedule A. The forms, schedules, and instructions can be found at the IRS website ( The instructions can be helpful in completing the forms. Facts: 1. Johnelle Henry is employed as a human resources manager for Toys Unlimited, Inc., and Latoya is a financial planner for her mother’s company, Long-term Investments, Inc., a full-service wealth-planning firm. They provide the follow- ing information: They both want to contribute to the presidential election campaign. They live at 9876 Old Waverly, Charleston, South Carolina 29401.
Paper For Above instruction
This paper provides a comprehensive analysis of complex individual tax return scenarios, focusing on specific case studies involving Keith and Jennifer Hamilton and Johnelle and Latoya Henry for the tax year 2017. The objective is to demonstrate the application of tax principles, forms, and schedules to accurately complete federal income tax returns, considering various income types, deductions, credits, and special circumstances.
The first case involves Keith and Jennifer Hamilton, who have multiple sources of income including wages from employment at Flyby Airlines and Small World Elementary School, taxable and tax-exempt interest income, and various other financial transactions. Their personal circumstances include the sale of a home, inheritance, and benefits received from insurance policies, which require careful classification for tax purposes. Additionally, their travel benefits and reimbursements due to medical and funeral expenses introduce taxable and nontaxable components that must be properly reported.
The case emphasizes the importance of identifying taxable fringe benefits such as airline tickets, and understanding the tax treatment of life insurance proceeds, inheritance, and disability payments. The Hamiltons also received a refund from their previous year's tax liability, which must be accounted for appropriately. They sold their residence, incurring a capital gain or loss, and purchased a new home, which involves considerations of home sale exclusion and basis calculations.
The second case focuses on Johnelle and Latoya Henry, with employment income from their respective jobs and potential itemized deductions. Their goal is to accurately file their 2017 federal income tax return, including Schedule A for itemized deductions, with a focus on compliance and maximizing eligible deductions.
Analysis of Tax Situations and Application of Tax Principles
In analyzing the Hamilton scenario, particular attention is paid to income classification, including the taxability of insurance proceeds, inheritance, raffle winnings, and reimbursements. The sale of a primary residence involves calculating the capital gain, with considerations of the exclusion amount for a principal residence (up to $250,000 for single filers and $500,000 for married filing jointly) and the adjusted basis.
Furthermore, fringe benefits such as airline tickets and union-provided transit benefits are evaluated for taxable income. The Hamiltons’ compliance with ACA insurance requirements is briefly noted, emphasizing the importance of healthcare coverage in tax reporting. On the other hand, the Henrys’ case illustrates the use of Schedule A for itemized deductions, with emphasis on charitable contributions, mortgage interest, and other deductible expenses.
Conclusion
Overall, these cases exemplify the multi-faceted nature of individual income tax reporting, requiring careful analysis of income sources, deductions, credits, and special circumstances. Proper application of tax laws ensures accurate filings and the maximization of eligible benefits, highlighting the importance of detailed recordkeeping and understanding of tax principles for compliance and tax planning.