Question

Your client, Heather Stark, loves dogs and volunteers for an organization called People for Dogs Inc. ("PFD"). PFD's mission is to temporarily provides foster homes and, ultimately, to find permanent homes for stray dogs. Heather volunteers for PDF, by temporarily fostering several dogs each year. Last year, Heather spent a considerable amount of time and money on the dogs that she fostered, including paying for dog food, veterinary services, dog toys, feeding dishes, and other supplies. You have been asked to prepare Heather's federal income tax return for last year.

1. Referring back to the lists of sample questions for determining the facts relevant to an issue, list two tax or non-tax facts questions you might ask Heather.
2. Identify a relevant tax facts question that you might ask the PFD organization.
3. List two tax issue that you would need to research in order to prepare Heather's 2015 federal income tax return.

Answer 1

Solution:-

As a Income tax return preparer, I nedd both qualitative and quantitive information from Mrs Heather. Howevwr as per question requirement I need following information:-

A

Tax Facts-

1. What is the Total Income of Heather for the year 2015.

2. What is the expenses that incurred by Heather for fostring several dogs like (Dog Foods, Veterinary services, Dog toys, Feeding dishes and other expenses).

Non Tax Facts:-

1. What is the age of Heather.

2. What is the Married status of Heather.

Note: Above non tax facts help to find income tax slab for Heather.

B.

Following is the relevent tax fact questions which need to ask from "PFD"

1. Is the PFD maintaining form 990 or not?

2. What is the method of accounting. Whether is it accrual based or cash based?

3. Any amount which is received by Heather from the organisation.

4. Total Income and expenses of "PFD" for the respective year.

C.

I think that, following tax issues needs to research to prepare federal incmoe tax return of Heather

1. To assess the eligibility of Heather for refund of tax credit (If Any).

2. To assess the Personel exemptions and exemptions for dependants. (If any).