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BC 442 ? Tax Return Fall 2014 Bill and Belinda Blanchard




Question;Bill (birthday 1/14/74, SS# 482-11-5678) and Belinda (birthday 2/4/76, SS# 482-121234) Blanchard are married, reside in Cedar Rapids, Iowa and have one dependent child,Lizzie (birthday 3/6/94, SS# 482-15-4321). During the fall of 2013, Lizzie was a fulltime student at Mount Mercy University (first-year). Bill works as a design engineer atRockwell Collins while Belinda runs a craft business from their home. Belinda?s craft business consists of making craft items for sale at craft shows held periodically at various locations. Belinda spends considerable time and effort on her craft business and the business has been consistently profitable over the years. The Blanchard?s live at 234 Chestnut Way NE, Cedar Rapids, IA 52402. There is a mortgage on their home. Theyalso have a personal loan to pay for Lizzie?s college tuition.Bill cares for his mother, Jacqueline Blanchard (482-98-0987), age 71. She lives in a nearby apartment. Her income, entirely comprised of social security, amounts to $4,200 per year which she used for her support. Bill provided $4,500 for her support last year consisting of help with her rent, clothing, food and utility bills.Bill?s gross salary is $115,000 per year. Last year he contributed $10,900 to his 401K plan and paid his portion of medical insurance coverage for his family, of $5,000, both items were paid on a pre-tax basis. Belinda?s receipts from her craft sales totaled $18,400. Other items of income included interest from a Wells Fargo Bank certificate of deposit of $1,650, interest on Fidelity Treasury Bond Fund of $730, and interest on City of Iowa City municipal bonds of $920. The Iowa City bonds were considered privateactivity bonds.On 9/10/13, Bill sold his 200 shares of Rockwell Collins stock for $65 per share, less a $30 commission. The stock held in a brokerage account owned by Bill and Belinda was purchased on 8/4/09 for $45 per share. (He received no dividends on the stock in 2013.) Bill had the following tax-related withholding from his paycheck:Federal Income Tax$9,700State Income Tax6,400Social Security & Medicare Tax8,204Belinda made estimated tax payments totaling $1,615 to cover her self-employment taxeson her craft business.The Blanchard?s paid $325 to license their car. Their auto weighs 3,750 pounds. TheIowa Department of Revenue provides information about how much of the Iowa licensefee is deductible as a personal property tax. That information can be found on the IowaDepartment of Revenue website at: on page 5.The Blanchard?s paid $1,150 in State and Local Sales tax. During the year, theBlanchard?s paid interest on their mortgage at Wells Fargo Bank (mortgage balance$220,000) of $14,000. They paid into escrow $6,500 for real estate taxes, however, thereport from the mortgage company at the end of the year showed that $6,200 of propertytaxes was remitted from the escrow to the Linn County for property taxes on the home.Other interest paid by the Blanchard?s included $2,300 on their VISA credit card debt,and $3,200 interest on the personal loans funding a portion of Lizzie?s tuition.Belinda had some expenses related to her craft sales these included:Craft Supplies UsedPostage for Mailing CraftsTravel and Lodging to Craft ShowsMeals during out-of-town Craft ShowsBelinda?s beginning and ending inventory of finished crafts wereOther outlays include:2013 College tuition for LizzieLess scholarships received (applied against tuition)Required Textbooks for classesLizzie?s room and board at CollegeCash Contribution to the American Red CrossMedical costs paid by the Blanchard?s, not covered by insurance(Plan Deductible, Required Out of Pocket and Co-payments)Bill?s unreimbursed employee expenses (mileage rate on vehicleIn excess of Rockwell?s reimbursement rate)$4,2601452,2306701,00015,00010,0007807,0005251,6902,400(1) Prepare the income tax return using available resources (i.e. textbook, IRS Forminstructions, IRS Publication 17.) All questions regarding case facts orassignment requirements should be asked to the instructor.)Contrary to the instructions in the syllabus, one tax return may be submittedper group of no more than 3 students. I suggest each doing the tax return andgetting together to go over differences and to create the return for submission.(2) Prepare the federal tax return for the Blanchards using 2013 tax forms and 2013tax law. You may neatly write your solution on the forms or type your numberson the form. Be sure that your tax return is easily readable to avoid pointdeductions.(3) You may encounter some items not yet covered in detail in the course. Use yourtextbook and the IRS form instructions as resources to resolve any issues youencounter. If you cannot find the solution, feel free to use IRS Publications.Publication 17, Your Federal Income Tax (For Individuals), a general documentwhich provides an overview of the income tax. The Publication covers specifictax treatment of items and also references the appropriate IRS Publication formore detailed issues.2(4) On any tax issues you encounter, document the resource you used to make adetermination on the issue. Be sure to cite the resource and the page numberwhere you found the solution.(5) If you need additional information to properly complete the form (such as anaddress or whether the Blanchard?s want to give $3 to the Presidential ElectionCampaign fund, feel free to add that information on your own.)Be sure to include the following Forms and Schedules (Note that the Form 1040 shouldbe first followed by the forms using their respective sequence number found in the topright hand corner of the forms.)Form 1040Schedule ASchedule BSchedule CSchedule DForm 8949Schedule SEForm 6251 (calculate and include even if no alternative minimum tax is due)Form 8863Download the forms and instructions to the forms from the IRS website


Paper#39906 | Written in 18-Jul-2015

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