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ECAC 330 Tax Return-Individual Project Instructions: PART I: The below fact pattern relates to the Moula family 2020 tax return. Use your answers to the in class poll questions to fill in the blanks. Your Part I deliverable should be an organized summary (using excel) of all items of income and deductions as well as an estimate of federal, state and local income tax. Utilize the Gross income to AGI to Taxable Income format we use in class. In addition to calculating taxes, research each item of income and deductions, determine what Internal Revenue Code “IRC” Section is applicable to the item from a tax return perspective. Clearly designate which section of the IRC determines whether an item is included/excluded and any calculations to determine the amount. Also designate the right of your list of income and deductions which form(s) may be necessary to file with respect to the various components of the below scenario. As this is a deliverable, the Moula family expects it to be of highest quality. Format the spreadsheet to look professional if printed. Label columns and feel free to add footnotes if needed. Ret (age 38) and Riever (age 41) Moula are married and live in Howard County, Maryland. The Moula family would like to file a joint tax return for the 2020 tax year. The following information relates to the Moula’s tax year: • The Moula family has 2 kids in total. All kids are tax dependents for federal tax purposes • Child ages are as follows: 9, 12 Ret’s Form W-2 provided the following wages and withholding for the year: Reiver held 1 job during the year. Reiver’s Form W-2 provided the following wages and withholding for the year: 401 one both or no employer 401 Employer Gross Wages Federal Income Tax Withholding State and Local Income Tax Withholding Economic Professor 115,000 23,000 6,613 Employer Gross Wages Federal Income Tax Withholding State and Local Income Tax Withholding Tax Consultant 197,700 $39,540 11,368 All applicable and appropriate payroll taxes were withheld by the Moulas’ respective employers. Everyone in the Moula family was covered by minimum essential health insurance during each month in 2020. The insurance was provided by Ret’s primary employer. ECAC 330 The Moula family also had the following investment activities during the year: Interest income from Dunder Bank $230 Interest income from City of Maryland, Bond $450 Interest income from U.S. Treasury Bond $675 Dividends from shareholdings $1,885 Stock purchases and sales - see chart for Scenarios 1, 2, and 3 The Moula family did not own, control or manage any foreign bank accounts nor were they grantors or beneficiaries of a foreign trust during the tax year. The Moula family paid or incurred the following expenses during the year: - Daycare costs for Child #1 of $8,000 - Dentist/Orthodontist/Doctor fees (unreimbursed by insurance) $ 10,500 - Prescriptions (unreimbursed by insurance) $ 1,380 - Mortgage interest on principal residence $ __________ - Real property taxes on residence $ ________ - Vehicle registration fee based upon age of vehicle $ 1,250 - Fee paid to Grit & Company, CPAs for tax preparation $ 2,000 As part of their employer fringe benefits, the following amounts should be considered ● Ret’’s employer paid their gym memberships of $600 for the year. Ret took advantage of this benefit ● Both Companies provided 401k programs in which up to 8% of income could be contributed during the year and the Company would match contributions by 75%. ● Reiver’s company offered a Healthcare Savings Account where pre-tax contributions of up to $2,600 could be used to pay for qualified medical expenses. Reiver contributed the full $2,600 to the account and used it towards doctor/dentist fees listed above The Moula family made the following charitable contributions during the year: - Contribution to the Red Cross $ 1,000 - Contribution to MD Food Bank $ 2,500 - Contribution to their Church of $ 3,750 - Contribution of old toys and clothes to Goodwill estimated at $450 ECAC 330 Case Study - Rubric Student Name _________________________ Item Description Possible Points Graded Points Part I 1. Clearly organizes income and deduction items 30 2. Appropriately designates IRC sections for each item 30 3. Includes all relevant Forms to be considered for 2020 30 4. Provides a good estimate of federal, state, and local tax liability 30 5. Formats Part I deliverable in a professional layout 20 ECAC 330 Fall 2020 1040 Teams ECAC 330 - 1040 Project Polling Response Details Response Details: Question 1 Occupation details Gross Salary Federal Tax whheld State & Local Tax whheld Auditor $166,800 $33,360 $9,591 Economic Professor $115,000 $23,000 $6,613 Tax Consultant $197,700 $39,540 $11,368 Government Accounting $118,000 $23,600 $6,785 Question 2 The number chosen represents your # of kids Child Age 1 5 2 9 3 12 4 16 Question 3 County - determines applicable county tax rates to consider Question 4 House type Cost of Home Annual Mortgage Interest Annual Property Taxes Townhome $362,500 $13,478 $4,414 4 Bed House $625,000 $16,000 $5,250 5 Bed 4 Bath House w Pool $850,000 $25,200 $7,880 Question 5 Capital Gain Scenarios Scenario 1 Sold 100 shares of Starbucks on 9/4/19 for $96.11 a share. Shares were purchased on 3/11/19 for $69.68 a share. Sold 15 shares of Amazon on 10/8/19 for $1705 a share. Shares were purchased on 7/23/19 for $1995 a share. Sold 100 shares of Apple on 1/3/19 for $35 a share. Shares were purchased on 8/28/17 for $40 a share. Sold 100 shares of Apple on 12/16/19 for $70 a share. Shares were purchased on 8/28/17 for $40 a share. Sold 100 shares of Coca Cola on 9/4/19 for $55.77 a share. Shares were purchased on 8/13/18 for $49.86 a share. Sold 115 shares of GE on 12/31/19 for $19.18 a share. Shares were purchased on 5/15/19 for $18.95 a share. Scenario 2 Sold 200 shares of Starbucks on 12/23/19 for $88.23 a share. Shares were purchased on 9/4/19 for $88.23 a share. Sold 5 shares of Amazon on 7/23/19 for $1995 a share. Shares were purchased on 1/24/18 for $1357 a share. Sold 100 shares of Apple on 2/12/19 for $43 a share. Shares were purchased on 1/3/19 for $35 a share. Sold 100 shares of Coca Cola on 2/26/19 for $44.69 a share. Shares were purchased on 8/13/18 for $49.86 a share. Sold 110 shares of GE on 5/5/19 for $18.95 a share. Shares were purchased on 4/18/16 for $42.42 a share. Sold 10 shares of GME on 3/8/20 for $193 a share. Shares were purchased on 1/27/20 for $354 a share Scenario 3 Sold 200 shares of Starbucks on 12/23/19 for $88.23 a share. Shares were purchased on 9/4/19 for $88.23 a share. Sold 15 shares of Amazon on 10/8/19 for $1705 a share. Shares were purchased on 7/23/19 for $1995 a share. Sold 100 shares of Apple on 12/16/19 for $70 a share. Shares were purchased on 8/28/17 for $40 a share. Sold 115 shares of GE on 12/31/19 for $19.18 a share. Shares were purchased on 5/15/19 for $18.95 a share. Sold 10 shares of GME on 3/8/20 for $193 a share. Shares were purchased on 1/27/20 for $354 a share