Question

In: Accounting

Obtain the supporting information from your Portfolio Project option. You will also use the Schedule A...

Obtain the supporting information from your Portfolio Project option. You will also use the Schedule A template included under that same option as applicable. If Schedule A is not applicable, state so on the form.

Show all calculations within the cells of the template. This means that you must use formulas and links so that your thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading.

Review the Portfolio Project Milestone Rubric to understand how you will be graded on the project.

The deliverables are as follows:
The completed Form 1040-Schedule A template.

Case:

Brian and Sheila Williams were married in October of 2008. They live at 1000 Main Street, Atlanta, GA 33127. Brian is a postal service worker. Sheila is a teacher at Grady High School. Brian’s social security number is 555-11-1111 and Sheila’s social security number is 555-22-2222. They have a dependent daughter Jayla who is 10 years old (Born on May 12th). Jayla’s social security number is 555-33-3333. In 2016, Brian's wages was $45,860 while Sheila's was $43,590.
Included or Excluded Items Reasoning for Including or Excluding and if Including, Indicate amount to include
Two years ago, the taxpayer loaned a friend $2000. The friend has filed for bankruptcy this year and will not be able to repay
Earned $100 interest on county municipal bonds
Found a diamond worth $1000 on the ground
Received $500 in death benefits fron Brian's father
Received $4,000 court settlement. $1,000 was punitive damanges.
Brian paid $400/month in child support
Received a $1000 gift from his brother
Sheila won $100 playing bingo
Brian paid $200/month in alimony to his ex-wife
Sheila received a $1000 gift from her mother
Sheila spent $300 on supplies for her classroom
Portfolio Investments
Stock Acquired Sold Sales Price Cost (Basis) Qualified Dividends
Red Stock 2/1/2016 10/5/2016 $6,000 $2,500 $0
White Stock 6/11/2009 10/15/2016 $5,000 $4,000 $100
Blue Stock 10/1/2005 8/3/2016 $2,000 $10,000 $0
Black Stock 3/6/2016 12/15/2016 $3,000 $5,000 $0
Yellow Stock 4/5/2006 N/A N/A $5,000 $300
Interest Income Source Amount
Money Market Account $200
Savings Account $25
State Municipal Bonds $35
Rental Property
They own and rent two pieces of residential real estate in Miami, FL. These properties were acquired with cash (so there are no mortgages on the homes). They both have real estate broker licenses in Georgia and Florida. They dedicate enough hours (through their business) to qualify as a “real estate professional” with regard to these properties.
Property 1
The first property is located at 17750 NW 17th Ave, Miami, FL. They collect $1,000 monthly in rent. The property was purchased June 30, 2016 for $150,000. The tax records show that the value of the land is $30,000 and the value of the home was $90,000 when purchased. They actively participate in the management of the real property.
The property has the following expenditures:
Property tax $7,000/yr
Repairs $   900/yr
Insurance $1,200/yr
Washing Machine $300 (purchased 6/2/2015)
Refrigerator $700 (purchased 7/1/2016)
Furniture $2,000 (purchased 4/1/2014)
Property 2
The second property is located at 5610 NW 11th Ave, Miami, FL. They collect $1,500 monthly in rent. The property was purchased on June 12, 2016 for $100,000. The tax records show that the value of the land is $20,000 and the value of the home was $80,000 when purchased. They actively participate in the management of the real property.
The property has the following expenditures:
Property tax $6,200/yr
Repairs $3,000/yr
Insurance $1,200/yr
Legal fees $   500/yr
Advertising Expense $   500/yr

Schedule A:

SCHEDULE A OMB No. 1545-0074
(Form 1040) Itemized Deductions 2016
Department of the Treasury Internal Revenue Service (99) ? Information about Schedule A and its separate instructions is at www.irs.gov/schedulea      Attachment
? Attach to Form 1040.      Sequence No. 07
Name(s) shown on Form1040     Your social security number
                                            Medical                   and                        Dental               Expenses                                                                                                                                                                          Caution. Do not include expenses reimbursed or paid by others.
1 Medical and dental expenses (see instructions)..... 1
2 Enter amount from Form 1040, line 38 2
3 Multiply line 2 by 10% (.10). But if either you or your spouse was
born before January 2, 1949, multiply line 2 by 7.5% (.075) instead 3
4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-.   .   .   .   .   .    .   .     4
Taxes You                                           Paid 5 State and local (check only one box):
a ?   Income tax or } .   .   .   .   .    .   .
b ? General sales tax 5
6 Real estate taxes (see instructions) . . . . . . . . . 6
7 Personal Property taxes. .   .   .   .   .   .   .   .   .   .   . 7
8 Other taxes. List type and amount > .
8
9 Add lines 5 through 8 9
Interest You Paid     
Note.                          Your mortgage interest deduction may be limited (see instructions).
10 Home mortgage interest and points reported to you on Form 1098 10
11 Home mortgage interest not reported to you on Form 1098. If paid
to the person from whom you bought the home, see instructions
and show that person’s name, identifying no., and address ?
11
12 Points not reported to you on Form 1098. See instructions for
special rules   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 12
13 Mortgage insurance premiums (see instructions)   .   .   .   . . 13
14 Investment interest. Attach Form 4952 if required. (See instructions.) 14
15 Add lines 10 through 14.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 15
Gifts to 16 Gifts by cash or check. If you made any gift of $250 or more,
Charity see instructions.   .   .   .   .   .   .   .   . . .   .   .   .   .   . 16
if you made a 17 Other than by cash or check. If any gift of $250 or more, see
gift and got a instructions. You must attach Form 8283 if over $500   .   .   . 17
benefits for it ., 18 Carryover from prior year   .   .   .   .   .   .   .   .   .   .   .   . 18
see instructions 19 Add lines 16 through 18.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 19
Casualty and Theft Losses 20 Casualty or theft loss(es). Attach Form 4684. (See instructions.)   . .   .   .   .   .   .   . 20
Job Expenses                         and Certain                    Miscellaneous                   Deductions
21 Unreimbursed employee expenses—job travel, union dues, 21
ob education, etc. Attach Form 2106 or 2106-EZ if required. 22
(see instructions) ?
22 Tax preparation fees   .   .   .   .   .   .   .   .   .   .   .   . .
23 Other expenses—investment, safe deposit box, etc. List type
and amount ? 23
24
24 Add lines 21 through 23   .   .   .   .   .   .   .   .   .   .   . .
25 Enter amount from Form 1040, line 38 25
26 Multiply line 25 by 2% (.02).   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 26
27 Subtract line 26 from line 24. If line 26 is more than line 24, enter -0-.   .   .   .   . . 27
Other Miscellaneous Deductions 28 Other—from list in instructions. List type and amount ?
28
Total                                                       Itemized                                          Deductions 29 Is Form 1040, line 38, over $150,000?
? No. Your deduction is not limited. Add the amounts in the far right column }
for lines 4 through 28. Also, enter this amount on Form 1040, line 40.
?   Yes. Your deduction may be limited. See the Itemized Deductions .   . 29
Worksheet in the instructions to figure the amount to enter.
30 If you elect to itemize deductions even though they are less than your standard
deduction, check here .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . ? ?
For Paperwork Reduction Act Notice, see Form 1040 instructions.                Cat. No. 17145C Schedule A (Form 1040) 2016

Form 1040

Form 1040 Department of the Treasury Internal Revenue Service 2016
U.S. Individual Tax Form
OMB No.1545-0074 IRS Use Only--Do not write or staple in this space
For the year Jan.1--Dec. 31,2016, or any other tax year beginning ,2016, ,20 See Separate Instructions
Your first name and initial Last name Social Security Number
If a joint return, spouses first name and initial Last name Spouse Social Security Number
Home address( number and street). If you have a P.O. Box, see instructions Make Sure that the SSN(s) above
and on line 6c are correct .
City, town, or post office, state, and zip code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign
Check here if you, or your spouse if filing jointly,
Foreign country name Foreign province/state/country Foreign postal code checking this box below will not change your tax
refund. you spouse
Filing Status 1. Single 4.Head of Household (with qualifying person.) (See instructions.) If
Check only one box 2.. married filing jointly the qualifying person is a child but not your dependent, enter this
3. Married filing separately. Enter spouse's SSN above child's name here
and full name here. 5. Qualifying Window(er) with dependent child
Exemptions 6a Yourself. If someone can claim you as a dependent, do not check box 6a ] Boxes checked
b spouse ] on 6a and 6b
If more than four c. Dependents
dependents, see (1) First name Last name (2) dependents (3) dependents (4) check if child under age 17 No. of children
instructions and social security number relationship to you qualifying for tax credit see on 6c who:
check here instructions. lived with you
did not live with you
due to divorce or
separation
(see instructions)
Dependents on
6c not entered
above
d. Total number of Exemptions Claimed Add numbers on lines above
Income 7 Wages, salaries, tips, etc. Attach Forms (W-2) 7 7000
8a Taxable interest. Attach Schedule B if required 8a
Attach Form(s) b Tax-exempt interest. Do not include on line 8a 8b
W-2 here. Also 9a Ordinary dividends. Attach Schedule B if required 9a
attach Forms(s) b Qualified dividends 9b
W-2 and 1099-R 10 Taxable refunds, credits, or offsets state or local income taxes 10
if tax was withheld. 11 Alimony received 11
12 Business income or (loss). Attach Schedule C or C-EZ 12
If you did not 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 13
get a W-2, 14 other gains or (losses). Attach Form 4797 14
see instructions 15a IRA distributions 15a b Taxable amount 15b
16a Pensions and annuities 16a b Taxable amount 16b
17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17
18 Farm income or (loss). Attach Schedule F 18
19 Unemployment compensation 19
20a Social security benefits 20a b Taxable amount 20b
21 other income. List type and amount 21 300
22 combine the amounts in the far right column for lines 7 through 21. This is your total income This is your total income. 22
Adjusted 23 Educator expenses 23
Gross 24 Certain business expenses of reservists, performing artists, and fee-basis government. Attach Form 2106 or 2106-EZ 24
Income
25 Health-savings account deduction. Attach Form 8889 25
26 Moving Expenses. Attach Form 3903 26
27 Deductible part of self-employment tax. Attach Schedule SE 27
28 Self-employed SEP, SIMPLE, and qualified plans 28
29 Self-employed health insurance deduction 29
30 Penalty on early withdrawal of savings 30
31a Alimony paid b. Recipient's SSN 31a
32 IRA deduction 32
33 Student loan interest deduction 33
34 Tuition and fees. Attach Form 8917 34
35 Domestic production activities deduction. Attach Form 8903 35
36 Add lines 23 through 35 36
37 Subtract line 36 from line 22. This is your adjusted gross income. 37

Solutions

Expert Solution

Included

                              Excluded

Gross Income

                                                                                   -  

Two years ago, taxpayer loaned a friend $2000. friend has filed for bankruptcy this year and will not be able to repay

         -  

                                                                                   -  

Earned 100 interest on county municipal bonds

        -  

The Found a diamond worth 1000 on the ground

                                                                                                                -  

1,000

Received 500 in death benefits from Brian's father

         -  

Received $4,000 court settlement. $1,000 was punitive damages.

                                                                                                                -  

1,000

Brian paid $400/month in child support

                                                                                                                -  

4,800

Received a $1000 gift from his brother

       -  

Sheila won $100 playing bingo

                                                                                                                -  

     100

                                                                                   -  

Brian paid $200/month in alimony to his ex-wife

       -  

                                                                                   -  

Sheila received a $1000 gift from her mother

      -  

                                                                                   -  

Sheila spent 300 on supplies for her classroom

         -  

6,900

Column A &B

Deductible Items: To be appeared on Form 1040

1. Loan - 2000 NA

2. Child Support - 4800 per year No.28

3. Alimony - 2400 No.28

4. Supplies to Class room - 300   No.21

5. Capital Loss (Blue Stock) - 8000 NA

6. Capital Loss (Black Stock) - 2000 NA

7. Property Tax (Property 1) -7000   No.7

8. Repairs (Property 1) - $900   No.28

9. Insurance (Property 1) - 1200 No.28

10. Property Tax (Property 2) - $6200 No.7

11. Repairs (Property 2) - 3000   No.28

12. Insurance (Property 2) - 1200 No.28

13. Legal Fees (Property 2) - 500   No.28

14. Advertising Expense (Property 2) - $500 No.28



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