Your client, Ben McDonald, has written you about his tax situation. Please assume that gross income...

Your client, Ben McDonald, has written you about his tax situation. Please assume that gross income is $172,900 (which consists only of salary) for purposes of this problem.

December 31, 2016

Dear ***** *****, CPA:

Hi, it’s Ben McDonald again. I understand you need some more information from me in order to complete my tax return. Please let me know what information you need and I’ll be happy to provide it.

I moved this year due to taking a job at SwissLog. The move was in late January and I worked my job at SwissLog for the rest of the year. I moved 650 miles away from my old house but I still live in the same state. I left a little bit early to go on a house-hunting trip that cost me a total of $450. I hired a moving company to move our stuff at a cost of $2,300, and I drove Junior in my car. Junior and I got a hotel room along the way that cost us $65. We spent $35 on meals on the way to our new home. Oh yeah, I took my little boy to a movie on the way and that cost $20.

Can you believe I’m still paying off my student loans, even after 15 years? I paid a total of $900 in interest on my old student loans this year.

Since SwissLog (my employer) never started a retirement plan, I decided I should probably start saving for my golden years. I contributed $3,000 to what the bank referred to as a regular IRA (or was it a REM?). Oh yeah. I also did a little investing this year. I bought a limited partnership interest in IGlow, Ltd. for $10,000. I thought it was going to be a real winner, but this year they took a bath. My portion of the loss was $8,000. Well, at least I did not actually do any work for IGlow, and I get the tax deduction - right?

That should be all the information you need right now. Please calculate my adjusted gross income and complete page 1 of Form 1040. You’re still doing this for free, right?

Sincerely,

Ben

Required: calculate Ben’s AGI and complete the 1^st page of the 1040 form (forms can be downloaded from the IRS website).

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ekkarill92 answered 9 months ago

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