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Richard and Gloria Harris tax problem




Question;Richard and Gloria Harris, both age 56, are married and file a joint income tax return. Richard?s social security number is 587-66-8595 and Gloria?s social security number is 587-77-7070. Richard is employed as an accounting professor, and Gloria is a self-employed real estate agent. They have two dependent children, Richard, Jr. age 19 and Stacee Nicole age 21. Both Richard, Jr. and Stacee are full-time students at State University. Although both Richard, Jr. and Stacee have part-time jobs at State University, their parents contributed over 50% of their support. Richard and Gloria reside at 2323 Broken Arrow Boulevard, Denton, Texas, 76201-6205. Richard Jr.?s Social Security number is 587-22-0009 and Stacee?s is 487-22-0010.2. During 2013 Richard earned $70,280 from State University in Denton, TX. State University withheld $18,209 in Federal income tax and $5,376.42 of Social Security tax. Richard also earned consulting income of $42,000 and incurred the following expenses:Depreciation on Equipment (properly?Computed under MACRS, YEAR 2,?On five-year property)???$ 2,125Rent on building????? 3,600Utilities?????? 2,800Supplies?????? 1,200OTHER INFORMATION:BUSINESS NAME:???Harris Consulting.BUSINESS ADDRESS:?1365 BROKEN ARROW,DENTON, TEXAS 76201-6205??????METHOD OF ACCOUNTING?Cash.EMPLOYER IDENTIFICATION NUMBER:?75-1234567.3. Richard and Gloria received the following interest income during the year:First State Bank????$ 2,860United Bank????? 1,134Federal Credit Union???? 1,0904. The Harris?s received the following dividend income during the year:Cable Corporation????1, 250General Corporation???? 860Control Data Corporation??? 4055. Gloria has been self-employed as a real estate agent for the last five years. She operates under the name ?Harris Realty.? Her office is located at 6480 Oak Tree Drive in Denton, Texas, 76203. She uses the cash basis of accounting. Her employer identification number is 75-1137378.The following items relate to her practice for 2013:??Real Estate Commissions???$ 70,250??Expenses:???Advertising???? 1,450???Bank Service Charges??? 130???Dues & Publications?? 950???Entertainment???? 1,575???Insurance???? 2,450???Legal and Professional Service? 6,550???Office rent???? 4,800???Utilities and Telephone?? 2,057???Wages????? 14,250???Janitorial Service??? 2,400???Payroll Tax Expense??? 1,090Gloria purchased a new auto in 2013 to use in her business. The car was purchased on January 5, 2013, at a cost of $22,500. Gloria accumulated a total of 21,000 miles in 2013, duly recorded in a detailed log of her business and personal miles. Gloria would like to use the automatic mileage method to claim expenses related to the automobile?s operation. During 2013, 7,250 miles were personal. Gloria acquired the following assets for use in her business during 2013:Date Acquired????Item????Cost?June 1, 2013????Office Furniture??$7,250August 17, 2013???Microcomputer?? 1,600August 17, 2013???Laser Printer??? 625Gloria elected to expense maximum allowable portion of the cost of the above assets under the provisions of the Section 179 Expense Election. Any remaining cost should be depreciated using the modified accelerated cost recovery system (MACRS). There are no other depreciable assets for this business.6. The Harris? were involved in several property transactions during the year:(a) On September 22, 2013, they sold 300 shares of Control Data Control Corporation?s stock for $125 per share. The stock was purchased on January 17, 1984 for $90 per share.(b) On November 12, 2013, the Harris?s sold their large five-bedroom home for $208,000. The Harris? had acquired the home fifteen years ago for $102,000. On November 13, 2013, the Harris? moved into a smaller three-bedroom home that was purchased for $99,000. The Harris? expended $2,450 in fixing-up expenses in order to expedite the sale of their old home.(c) Mr. Harris sold the family?s personal auto on December 23, 2013, for $2,200. The car was purchased five years ago at a cost of $17,000. Mr. Harris used the cash from the sale of the car as a down payment on their new auto.7. Mr. Harris has three limited partnership interests which are passive activities. All of his investment was at risk. Reflected below is the net income (loss) reported to Mr. Harris on schedule K-1 for each partnership interest.Interest????Income/(Loss)????EMPLOYER I.D.?B&H Enterprises??($ 32,000)????75-3852827?Zales Limited???($ 18,000)????75-1087538?Hank Field Enterprises? $ 28,000????75-85273018. The Harris? also own a rental house in Denton. The house was occupied during the entire year, producing rental income of $18,000. To avoid managerial duties for the property, the Harris? paid a commission of $1,700 to a property management company. The rental house was acquired on January 5, 2008, at a cost of $80,000. The Harris? allocated $10,000 to the cost of the land. The rental house is being depreciated under MACRS. Other expenses related to the property are reflected below:??Interest Expense????8,250??Taxes??????1,350??Insurance????? 725??Maintenance and Repairs??? 1809. The Harris? had the following personal expenditures during 2013:Medical insurance premiums???$ 3,600Prescription medicine and drugs?? 1,560Doctor and hospital bills??? 3,540Real Estate Taxes on Residence?? 3,975Sales Taxes on new car??? 2,300Home Mortgage Interest??? 21,970Credit Card Interest???? 3,850Interest on Installment Purchases?? 1,050Cash contributions?Eastside Baptist Church?? 3,600?United Way???? 250?Boy Scouts???? 190?State University??? 2,000Tax Preparation Fee???? 675Medical expenses are net of insurance reimbursement.10. The Harris? made timely estimated tax payments of $14,000 during the year. ($3,500 each quarter.)Required (105 points):?1. Assume that Gloria and Richard Harris have engaged you to prepare their income tax return for 2013. The Harris would like to have $3 go to the Presidential Election Campaign. If they have a refund, they would like to have the entire amount mailed to them.2. Assume that you are in tax practice and that you have agreed to accept the engagement as a paid preparer. Your manual signature is your certification that you have prepared the return in accordance with the required instructions.3. Using Turbo Tax, H&R Block, or any other tax return software for individual taxpayers, prepare the Federal Income Tax Return for Gloria and Richard Harris for 2013. Be sure to include all supporting worksheets and calculations used in preparing the return.


Paper#38399 | Written in 18-Jul-2015

Price : $46