Tax Return Problem.
Extra Credit Problem Tax Return Problem Due at beginning of class – December 4, 2019 (Forms available at: http://www.irs.gov/formspubs/ ) Directions: Prepare 2019 federal income tax return, including all necessary schedules and attachments, for Donald and Melania Trump using the following information: Social Security Numbers: Donald- 123-45-6789, Melania – 333-222-111 Donald is age 64, Melania is age 51. Son –Barron – age 11 - SS# 555-77-6666. Melania paid $5,000 in child care expenses for Barron while she worked. Salary: Donald - $50,000, Melania – $20,000 Barron – $600 Interest from Mellon Bank - $8,000, Interest on New York municipal bonds - $4,000 Dividends on Trump, Inc. stock – 2,000 Sold 1,000 shares of IBM stock for $6,000 on January 15, 2019. Shares were purchased on January 15, 2008 for $4,000. Melania had the following operating results from her modeling business, which she operated as a sole proprietorship: Sales income - $12,000 Office supplies - 4,000 Advertising Expenses - 2,000 Entertainment expense – 1,000 Donald and Melania rented out the old family home in New York for the entire year: Rental income - $7,000, Mortgage interest - $3,000 Depreciation - The house was purchased in 12/01/17 at a cost of $100,000 and is depreciated on a straight-line basis over 27.5 years. Accumulated Depreciation from prior years was $3,788. Mortgage interest on the white house owned by Donald and lived in by family - $8,000 Real Estate taxes on the white house - $6,000; State income taxes withheld from Donald’s wages - $5,000 Federal income taxes withheld from Donald’s wages - $4,000 New York City sales tax paid by Donald was $1,800. State income tax refund of 2018 overpayment received in 2019 - $2,000 (2018 state income taxes were fully deductible on the 2018 tax return.) Donald had $6,000 of business travel expenses, which were reimbursed by his employer. Melania paid $3,000 in college tuition for graduate school. Donald contributed $9,000 to the United Way, and $6,000 to Fordham University during the year. Melania paid $4,000 of student loan interest. Notes 1. Please make up any non-financial information needed to complete the tax return that is not provided above. Extra Credit – To potentially assist in improving one’s grade to a “B-“, “C” or “D”, complete a separate tax return for Donald and Melania, adding the additional information found below: Sold 1,000 shares of GM stock for $5,000 on January 15, 2019. Shares were received as a gift from Ivanka, on January 15, 2016. Ivanka purchased stock on January 1, 1999 for $9,000. The value of the stock on January 15, 2016 was $6,000. Donald received $23,000 in social security benefits during the year. Donald paid $12,000 in alimony and $10,000 in child support to his first wife, Stormy. The couple was divorced in 2015. Melania’s law business purchased the following assets in 2019: 7 year equipment - $4,000 on Nov 30 5 year equipment - $2,000 on Dec. 15 (Please maximize her 2019 depreciation deduction.) Unreimbursed medical expenses · Dr. appointments for Donald and Melania - $8,000 · Dr. appointments for Barron - $7,000 · Prescription drugs - $4,000 · Melania’s eye glasses - $500 · Medical insurance premiums - $2,500 Donald and Melania also have a twenty year old daughter, Hilary. Hilary is a full-time graduate student and Donald paid $8,000 of tuition and 2,500 for food, on her behalf. Hilary had no other expenses during the year. Donald bought business suits for $5,000 that he wears only to the office and for official work events. Donald pays $2,500 in union dues related to his employment. Donald and Melania like to eat out and spent $5,000 at various restaurants in the D.C. area.