Tax Return Project
Accounting 401
Due
midnight April 21st 2013
Required:

Use the following information to complete Paul and Judy Vances 2012 federal
income
tax return. If information is missing, use reasonable assumptions to fill
in
the gaps.

You may need the following forms and schedules to complete the project:
Form
1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E,
Schedule
SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562
(for
the rental property), Form 4797, and Form 8863. The forms, schedules,
and
instructions can be found at the IRS Web site (www.irs.gov). The
instructions
can be helpful in completing the forms.

Facts:
1.
Paul J. and Judy L. Vance are married and file a joint return. Paul is self-employed
as
a dentist, and Judy
is a college professor.
Paul and Judy have
three children. The oldest is Vince who lives at home. Vince is a law
student
at
the University of Cincinnati and worked part-time during the year, earning
$1,500, which he spent for his own support.
Paul and Judy provided $6,000
toward
Vinces support (including $4,000 for Vinces fall tuition). They also
providedover half the support of their
daughter, Joan, who is a full-time
student
at Edgecliff College in Cincinnati. Joan worked part-time as an independent
contractor
during the year, earning $3,200.
Joan lived at home until
she
was married in December
2011. She filed a
joint return with her husband,
Patrick,
who earned $20,000
during the year. Jennifer is the youngest and
lived
in the Vances home for the entire year. The Vances provide you with the
following
additional information:

Paul and Judy would like to take advantage on their return of any
educational
expenses paid for their children.

The Vances do not want to contribute to the presidential election
campaign.

The Vances live at 621 Franklin Avenue, Cincinnati, OH 45211.

Pauls birthday is 3/5/1957 and his Social Security number is 333-45-6666.

Judys birthday is 4/24/1960 and her Social Security number is 566-77-8888.

Vinces birthday is 11/6/1988 and his Social Security number is
576-18-7928.

Joans birthday is 2/1/1992 and her Social Security number is 575-92-4321.

Jennifers birthday is 12/12/1999 and her Social Security number is
613-97-8465.

The Vances do not have any foreign bank accounts or trusts.

2.
Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000.
The
university withheld federal
income tax of $3,375, state
income tax of
$900, Cincinnati
city income tax of $375,
$1,260 of Social Security
tax and
$435 of Medicare tax. She also worked part of the year for Delta Airlines.
Delta
paid her $10,000 in salary,
and withheld federal
income tax of $1,125,
state income tax of $300, Cincinnati city income tax of $125, Social Security
tax of $420 and Medicare
tax of $145.

3.
The Vances received $800
of interest from State Savings Bank on a joint
account.
They received interest of $1,000
on City of Cincinnati bonds they
bought
in January with the
proceeds of a loan
from Third National Bank
of
Cincinnati.
They paid interest of
$1,100 on the loan. Paul received a dividend
of
$540 on General Bicycle
Corporation stock he owns. Judy received a dividend
of
$390 on Acme Clothing
Corporation stock she owns. Paul and Judy
received
a dividend of $865 on
jointly owned stock in Maple Company. All of
the
dividends received in 2011 are qualified dividends.

4.
Paul practices under the name Paul J. Vance, DDS. His business is located at
645
West Avenue, Cincinnati, OH 45211, and his employer identification number
is
01-2222222. Pauls gross
receipts during the year were $111,000. Paul uses
thecash method of accounting
for his business. Pauls business expenses are as
follows:

Advertising
$ 1,200
Professional
dues 490
Professional
journals 360
Contributions
to employee benefit plans 2,000
Malpractice
insurance 3,200
Fine
for overbilling State of Ohio for work 5,000
performed
on welfare patient
Insurance
on office contents 720
Interest
on money borrowed to refurbish office 600
Accounting
services 2,100
Miscellaneous
office expense 388
Office
rent 12,000
Dental
supplies 7,672
Utilities
and telephone 3,360
Wages
30,000
Payroll
taxes 2,400

In
June, Paul decided to refurbish his office. This project was completed and the
assets placed in service on July 1. Pauls expenditures included $8,000 for new
office furniture, $6,000 for new dental
equipment (seven-year recovery period),
and $2,000 for a new computer. Paul elected to compute his cost recovery
allowance
using MACRS. He did
not elect to use 179
immediate expensing,
and
he chose to not claim any
bonus depreciation.

5.
Judys mother, Sarah, died on July 2, 2006, leaving Judy her entire estate.
Included
in the estate was Sarahs residence (325 Oak Street, Cincinnati, OH
45211).
Sarahs basis in the
residence was $30,000. The fair market value of the
residence
on July 2, 2006, was $155,000.
The property was distributed to Judy
on
January 1, 2007. The Vances have held the property as rental property and
have
managed it themselves. From 2007, until June 30, 2011, they rented the
house
to the same tenant. The tenant was transferred to a branch office in
California
and moved out at the end of June. Since they did not want to bother
finding
a new tenant, Paul and Judy sold
the house on June 30, 2011. They
received
$140,000 for the house and
land ($15,000 for the land and $125,000 for
the
house), less a 6 percent
commission charged by the broker. They had
depreciated
the house using the MACRS
rules and conventions applicable to
residential real estate. To compute depreciation on the house, the Vances had
allocated
$15,000 of the propertys basis to the land on which the house is
located.
The Vances collected rent
of $1,000 a month during the six months
the
house was occupied during the year. They incurred the following related
expenses
during this period:

Property
insurance $500
Property
taxes 800
Maintenance
465
Depreciation
(to be computed) ?

6.
The Vances sold 200 shares of Capp Corporation stock on September 3,
2011,
for $42 a share
(minus a $50 commission). The Vances received the
stock
from Pauls father on June 25, 1980, as a wedding present. Pauls
father
originally purchased the stock for $10 per share in 1967. The stock
was
valued at $14.50 per share
on the date of the gift. No gift tax was paid
on
the gift.

7.
Judy is required by Xavier University to visit several high schools in the
Cincinnati
area
to evaluate Xavier University students who are doing their practice teaching.
However,
she is not reimbursed for
the expenses she incurs in doing this. During
the
spring semester (January through April 2011), she drove her personal automobile
6,800 miles in fulfilling this
obligation. Judy drove an additional 6,700 personal
miles during 2011. She has been using the car since June 30, 2010. Judy uses
the
standard mileage method to calculate her car expenses.

8.
Paul and Judy have given you a file containing the following receipts for
expenditures
during
the year:

Prescription
medicine and drugs (net of insurance reimbursement) $ 376
Doctor
and hospital bills (net of insurance reimbursement) 2,468
Penalty
for underpayment of last years state income tax 15
Real
estate taxes on personal residence 4,762
Interest
on home mortgage (paid to Home State Savings & Loan) 8,250
Interest
on credit cards (consumer purchases) 595
Cash
contribution to St. Matthews church 3,080
Payroll
deductions for Judys contributions to the United Way 150
Professional
dues (Judy) 325
Professional
subscriptions (Judy) 245
Fee
for preparation of 2010 tax return paid April 14, 2011 500

9.
The Vances filed their 2010 federal, state, and local returns on April 14,
2011.
They
paid the following additional 2010 taxes with their returns: federal income
taxes
of $630, state income taxes of $250, and city income taxes of $75.

10.
The Vances made timely estimated federal income tax payments of $1,500 each
quarter
during 2011. They also made estimated state income tax payments of
$300
each quarter and estimated city income tax payments of $160 each quarter.
The
Vances made all fourth-quarter payments on December 31, 2011. They would
like to receive a
refund for any overpayments.Tax Return ProjectAccounting 401Due
midnight April 21st 2013Required:
Use the following information to complete Paul and Judy Vances 2012 federalincome
tax return. If information is missing, use reasonable assumptions to fillin
the gaps.
You may need the following forms and schedules to complete the project:Form
1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E,Schedule
SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562(for
the rental property), Form 4797, and Form 8863. The forms, schedules,and
instructions can be found at the IRS Web site (www.irs.gov). Theinstructions
can be helpful in completing the forms.Facts:1.
Paul J. and Judy L. Vance are married and file a joint return. Paul is self-employedas
a dentist, and Judy
is a college professor.
Paul and Judy havethree children. The oldest is Vince who lives at home. Vince is a law
studentat
the University of Cincinnati and worked part-time during the year, earning$1,500, which he spent for his own support.
Paul and Judy provided $6,000toward
Vinces support (including $4,000 for Vinces fall tuition). They alsoprovidedover half the support of their
daughter, Joan, who is a full-timestudent
at Edgecliff College in Cincinnati. Joan worked part-time as an independentcontractor
during the year, earning $3,200.
Joan lived at home untilshe
was married in December
2011. She filed a
joint return with her husband,Patrick,
who earned $20,000
during the year. Jennifer is the youngest andlived
in the Vances home for the entire year. The Vances provide you with thefollowing
additional information:
Paul and Judy would like to take advantage on their return of anyeducational
expenses paid for their children.
The Vances do not want to contribute to the presidential electioncampaign.
The Vances live at 621 Franklin Avenue, Cincinnati, OH 45211.
Pauls birthday is 3/5/1957 and his Social Security number is 333-45-6666.
Judys birthday is 4/24/1960 and her Social Security number is 566-77-8888.
Vinces birthday is 11/6/1988 and his Social Security number is576-18-7928.
Joans birthday is 2/1/1992 and her Social Security number is 575-92-4321.
Jennifers birthday is 12/12/1999 and her Social Security number is613-97-8465.
The Vances do not have any foreign bank accounts or trusts.2.
Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000.The
university withheld federal
income tax of $3,375, state
income tax of$900, Cincinnati
city income tax of $375,
$1,260 of Social Security
tax and$435 of Medicare tax. She also worked part of the year for Delta Airlines.Delta
paid her $10,000 in salary,
and withheld federal
income tax of $1,125,state income tax of $300, Cincinnati city income tax of $125, Social Securitytax of $420 and Medicare
tax of $145.3.
The Vances received $800
of interest from State Savings Bank on a jointaccount.
They received interest of $1,000
on City of Cincinnati bonds theybought
in January with the
proceeds of a loan
from Third National Bank
ofCincinnati.
They paid interest of
$1,100 on the loan. Paul received a dividendof
$540 on General Bicycle
Corporation stock he owns. Judy received a dividendof
$390 on Acme Clothing
Corporation stock she owns. Paul and Judyreceived
a dividend of $865 on
jointly owned stock in Maple Company. All ofthe
dividends received in 2011 are qualified dividends.4.
Paul practices under the name Paul J. Vance, DDS. His business is located at645
West Avenue, Cincinnati, OH 45211, and his employer identification numberis
01-2222222. Pauls gross
receipts during the year were $111,000. Paul usesthecash method of accounting
for his business. Pauls business expenses are asfollows:Advertising
$ 1,200Professional
dues 490Professional
journals 360Contributions
to employee benefit plans 2,000Malpractice
insurance 3,200Fine
for overbilling State of Ohio for work 5,000performed
on welfare patientInsurance
on office contents 720Interest
on money borrowed to refurbish office 600Accounting
services 2,100Miscellaneous
office expense 388Office
rent 12,000Dental
supplies 7,672Utilities
and telephone 3,360Wages
30,000Payroll
taxes 2,400In
June, Paul decided to refurbish his office. This project was completed and theassets placed in service on July 1. Pauls expenditures included $8,000 for newoffice furniture, $6,000 for new dental
equipment (seven-year recovery period),and $2,000 for a new computer. Paul elected to compute his cost recoveryallowance
using MACRS. He did
not elect to use 179
immediate expensing,and
he chose to not claim any
bonus depreciation.5.
Judys mother, Sarah, died on July 2, 2006, leaving Judy her entire estate.Included
in the estate was Sarahs residence (325 Oak Street, Cincinnati, OH45211).
Sarahs basis in the
residence was $30,000. The fair market value of theresidence
on July 2, 2006, was $155,000.
The property was distributed to Judyon
January 1, 2007. The Vances have held the property as rental property andhave
managed it themselves. From 2007, until June 30, 2011, they rented thehouse
to the same tenant. The tenant was transferred to a branch office inCalifornia
and moved out at the end of June. Since they did not want to botherfinding
a new tenant, Paul and Judy sold
the house on June 30, 2011. Theyreceived
$140,000 for the house and
land ($15,000 for the land and $125,000 forthe
house), less a 6 percent
commission charged by the broker. They haddepreciated
the house using the MACRS
rules and conventions applicable toresidential real estate. To compute depreciation on the house, the Vances hadallocated
$15,000 of the propertys basis to the land on which the house islocated.
The Vances collected rent
of $1,000 a month during the six monthsthe
house was occupied during the year. They incurred the following relatedexpenses
during this period:Property
insurance $500Property
taxes 800Maintenance
465Depreciation
(to be computed) ?6.
The Vances sold 200 shares of Capp Corporation stock on September 3,2011,
for $42 a share
(minus a $50 commission). The Vances received thestock
from Pauls father on June 25, 1980, as a wedding present. Paulsfather
originally purchased the stock for $10 per share in 1967. The stockwas
valued at $14.50 per share
on the date of the gift. No gift tax was paidon
the gift.7.
Judy is required by Xavier University to visit several high schools in the
Cincinnatiarea
to evaluate Xavier University students who are doing their practice teaching.However,
she is not reimbursed for
the expenses she incurs in doing this. Duringthe
spring semester (January through April 2011), she drove her personal automobile6,800 miles in fulfilling this
obligation. Judy drove an additional 6,700 personalmiles during 2011. She has been using the car since June 30, 2010. Judy usesthe
standard mileage method to calculate her car expenses.8.
Paul and Judy have given you a file containing the following receipts for
expendituresduring
the year:Prescription
medicine and drugs (net of insurance reimbursement) $ 376Doctor
and hospital bills (net of insurance reimbursement) 2,468Penalty
for underpayment of last years state income tax 15Real
estate taxes on personal residence 4,762Interest
on home mortgage (paid to Home State Savings & Loan) 8,250Interest
on credit cards (consumer purchases) 595Cash
contribution to St. Matthews church 3,080Payroll
deductions for Judys contributions to the United Way 150Professional
dues (Judy) 325Professional
subscriptions (Judy) 245Fee
for preparation of 2010 tax return paid April 14, 2011 5009.
The Vances filed their 2010 federal, state, and local returns on April 14,
2011.They
paid the following additional 2010 taxes with their returns: federal incometaxes
of $630, state income taxes of $250, and city income taxes of $75.

10.
The Vances made timely estimated federal income tax payments of $1,500 eachquarter
during 2011. They also made estimated state income tax payments of$300
each quarter and estimated city income tax payments of $160 each quarter.The
Vances made all fourth-quarter payments on December 31, 2011. They wouldlike to receive a
refund for any overpayments.