acct613 group project 2 - august 2016

Asked by bizgrad
Dated: 5th Aug'18 01:14 PM
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Group project 2

Group Project 2: IRS Form 1040


I. Title:

Preparation of an Individual Income Tax Return

II. Introduction:

In a prior learning demonstration, you conducted tax research for Jerome Horowitz

(Nickname: Jerry), one of the firm’s clients for many years. You still work for the same

firm and Jerry is one of the firm’s clients assigned to you. Having just conducted tax

research to answer Jerry’s questions and provide him with guidance, you are very

familiar with his background and tax issues. Thus, you feel ready to prepare a federal

tax return for Jerry and his wife Debra (Debbie). Fortunately, the firm has copies of

Jerry Horowitz’s tax documents from prior years.

This hypothetical tax case has one main activity:

1) Preparing an individual federal income tax return using IRS Form 1040.

Throughout this learning demonstration, your professor will play the role of a senior

partner in the taxation department with whom you discuss various issues and submit

draft documents for approval in advance of communicating with clients.

To successfully complete this Learning Demonstration, you must demonstrate your

knowledge of and abilities to complete the following goals and competencies:

Goal 1: Communication: Learners demonstrate ability to communicate clearly both

orally and in writing.

o Competencies:

! 1.1 Organize document or presentation clearly in a manner

that promotes understanding

! 1.2 Develop coherent paragraphs or points so that each is internally

unified and so that each functions as part of the whole document or


! 1.3 Provide sufficient, correctly cited support that substantiates the

writer’s ideas

! 1.4 Tailor communications to the audience

! 1.5 Use sentence structure appropriate to the task, message and


! 1.6 Follow conventions of Standard Written English

Goal 2: Critical Thinking: Learners demonstrate ability to apply logical, systematic

decision-making processes to formulate clear, defensible ideas and to draw ethical


o Competencies:

! 2.1 Articulate and frame the issue

! 2.2 Collect and evaluate information

! 2.3 Evaluate the underlying causes or conditions of elements

contributing to an issue


! 2.4 Use systems thinking to arrive at a decision in the context

of an issue

! 2.5 Apply ethical principles when determining actions.

Goal 3: Quantitative Reasoning: Learners demonstrate the ability to use mathematical

operations and analytical concepts and operations to address problems and to inform


o Competency

! 3.1 Construct models that represent real-world problems or


! 3.2 Develop visible representation of data

! 3.3 Analyze data using mathematical/algebraic operations

! 3.4 Use calculated results to inform the problem or process

Goal 4: Leadership, Facilitation, and Collaboration: Learners lead, facilitate, and

collaborate with a variety of individuals and diverse teams to achieve organizational


o Competency

! 4.1 Demonstrate an ability to plan a particular objective or goal

Goal 8: Technical Competencies in Federal Taxation of Individuals, Partnerships,

Corporations, and Other Entities: learners demonstrate an applied understanding of tax

accounting and federal taxation law by conducting tax research, preparing individual

and corporate tax returns, and simulating tax audits. Learners apply competencies via

contextualized learning demonstrations to perform authentic professional tasks in

federal income taxation.

o Competency

! 8.1 Legal and regulatory: Students demonstrate a general

understanding of the Internal Revenue Code.

! 8.2 Professional research: learners demonstrate an applied

understanding of how to conduct taxation research based on statutory,

regulatory, and common-law rules.

! 8.3 Measurement and reporting: learners demonstrate an applied

understanding of applicable income taxation laws to prepare tax

returns for individuals, corporations, and or other entities.

! 8.4 Decision Making: Apply tax laws, regulations, and court cases

to individual situations, identifying and communicating planning

opportunities and compliance needs.

If you feel the need to refresh your memory regarding Jerry, Debbie, and her two

children, please review the Tax Research learning demonstration completed earlier in

the semester.


III. Steps to Completion

1. Prepare Form 1040

After careful consideration based on your tax advice regarding filing status, Jerry and

Debbie decided to use the filing status married filing jointly. Use the feedback you

received from the senior partner, final guidance you provided Jerry, and information in

Appendices A through G to prepare Form 1040 for Jerry and Debbie Horowitz.

Do not prepare a state tax return.

You may use forms found on the IRS Website:

IV. Deliverables


You will combine all files into one PDF document. If you are unfamiliar with combining

multiple documents to create one PDF file, the following site explains how using 16

different methods:

Naming convention:

Name the PDF file using the following convention:


LEO Assignment folder:

Submit the PDF document in your LEO assignment folder.

Form 1040: Married Filing Jointly

1. Individual tax return assuming Jerry and Debbie chose the filing status, Married

Filing Jointly, including:

a. Form 1040, pages 1 and 2

b. Schedule A

c. Schedule B

d. Schedule C (2 pages)

e. Schedule D (2 pages)

f. Schedule SE


List of Appendices:

! Appendix A: Jerry, Debbie, Sally, and Sam’s Personal information

! Appendix B: List of forms and documents Jerry dropped off in a shoebox

! Appendix C: Debbie’s earnings and other tax issues

! Appendix D: Financial information for Jerry’s Jiant Jumps Company

! Appendix E: Cancelled checks

! Appendix F: Tax documents

! Appendix G: Invoices and receipts


Appendix A: Jerry, Debbie, Sally, and Sam’s Personal information

Name Jerome Horowitz

Social Security Number 100-00-0001

Date of Birth April 2, 1965

Address 100 Lawrence Way

Pikesville, MD 21208

Telephone number 240-000-0000

Healthcare insurance Covered by his employer’s medical insurance plan.

Name Debra Francois-Horowitz

Social Security Number 100-00-0002

Date of Birth July 6, 1975

Telephone number 240-000-0000

Address 100 Lawrence Way

Pikesville, MD 21208

Healthcare insurance Covered by her husband’s medical insurance plan.

Name Sally Draper

Social Security Number 100-00-0003

Date of Birth June 2, 1999

Telephone number 410-000-0000

Address 112 Windward Way

Annapolis, MD 21401

Healthcare insurance Covered by her father’s insurance plan.

Name Samuel Draper

Social Security Number 100-00-0004

Date of Birth January 8, 2001

Telephone number 410-000-0000

Address 112 Windward Way

Annapolis, MD 21401

Healthcare insurance Covered by his father’s insurance plan.


Appendix B: List of forms and documents Jerry dropped off in a shoebox

Form / Source


From Amount

W-2 Wages from managing short term rentals for JPM Real

Estate Company, Inc.


W-2 Maryland income taxes withheld 16,800

1099-INT Interest Citibank personal checking account 2,450

1099-INT Interest received on Maryland State Municipal Bonds 1,875

1099-DIV Qualified dividends from various investments 36,250

None Sales Tax (Jerry didn’t keep receipts for purchases,

this is his best guess)


Real Property

Tax Bill

Property taxes paid 12,650

Form 1098 Home mortgage interest paid 8,265

Thank you card Charitable donation to Red Cross in cash 12,600

CPA Firm


Tax preparation fees 2,000



Estimated federal tax payment to the IRS $50,000



Cost to join Weight Watchers to maintain overall



Receipt Dog Groomer 165

1099-B Purchased 200 shares of Comcast Stock on



1099-B Sold 200 shares of Comcast Corp Stock on 4/15/20Y5 15,000

Jerry’s Jiant

Jumps Income


Net Income from Jerry's Jiant Jumps Company (Sole




Appendix C: Debbie’s earnings and other tax issues

Debbie has two children named Sally and Sam from her marriage to Donald. Sally and

Sam lived with Debbie the first six months and her dad, Donald Draper for last six

months of 20Y5. Debbie paid over 50% of the support for Sally and Sam.

Debbie is a homemaker who earned no income in 20Y5 other than annual alimony

payments of $120,000 and child support payments of $70,000.

In 20Y5, Debbie received the following from a property settlement associated with her

divorce decree:

Beverly Hills mansion $ 5,750,000

Bentley coupe $ 200,000

Home furnishings $ 800,000


Appendix D: Financial information for Jerry’s Jiant Jumps Company

Jerry’s Jiant Jumps Company is a sole proprietorship with the following Income

Statement for 20Y5.

Jerry’s Jiant Jumps Company

Income Statement

For the Year Ending Dec. 31, 20Y5


Jumping fees earned $ 622,000

Total Revenue $ 622,000

Operating Expenses:

Advertising $ 14,100

Rent on land 36,000

Insurance 60,000

Office expenses 6,900

Non-employee compensation 125,000

Supplies 50,000

Total Expenses $ 292,000

Net Income $ 330,000


Appendix E: Cancelled checks


Appendix F: Tax documents






Appendix G: Invoices and receipts


To: Debbie Horowitz

Thank you for your generous cash donation of $12,600 on December 20, 20Y5.

Your donation will be used to help millions around the world. We look forward to

another generous donation from you at next year’s Annual Philanthropists Gala.

acct613 group project 2 - august 2016
Answered by bizgrad
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Dated: 5th Aug'18 01:14 PM
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