prepare form1040 and schedulea, e, se and any nessary worksheet.
Tax Return Project PART II
Please complete the 2015 federal income tax return. Ignore the requirement
to attach any outside forms to the front page of the Form 1040 (for example
W-2's). If required information is missing, use reasonable assumptions to fill
in the gaps. NOTE: Part I information is repeated.
Joseph and Diana Carroll live in Cherry Hill, New Jersey. Joseph is the VicePresident of Sales at a small start-up company. Diana is a former advertising
executive who currently consults with former clients. She also serves on the
board of directors of an advertising company. The Carrolls have three
children Rebecca (age 18), Alan (age 15), and David (age 12). In January,
Rebecca left home to attend a liberal arts college. All three children qualify
as Joseph and Diana?s federal income tax dependents. The Carrolls plan to
file a joint tax return. The Carrolls provided the following information: Joseph?s social security number is 598-94-2583 Diana?s social security number is 301-52-2942 Rebecca?s social security number is 887-44-8710 Alan?s social security number is 810-42-9092 David?s social security number is 855-11-3021 The Carroll?s mailing address is 85 North Maple Drive, Cherry Hill, New
Joseph Carroll reported the following the following information relating to his
employment during the year:
Energy Gross Wages
$118,325 Federal Income
Tax Withholding Tax Withholding
$14,400 The above amounts do not reflect any income items described below.
Joseph?s employer withheld all payroll taxes it was required to withhold. The
entire Carroll family was covered by minimum essential health insurance
during each month in 2014. The insurance was provided by Joseph?s
employer, Alternative Energy.
Diana Carroll received the following revenue during the year (she uses the
cash method of accounting).
Consulting revenue reported to her on a Form 1099-MISC, Box 7
Jensen?s Health Products
1 Strategic Solutions $3,750 Board of director compensation reported to her on a Form 1099-MISC,
Natural Sunshine, Inc. $6,500 During the year, Diana paid the following business expenses:
$320 Diana drove 290 business miles for her consulting-related activities (she has
documentation to verify) Board of Director-related:
$225 Diana drove 315 business miles for her board of director activities (she has
documentation to verify)
Neither of Diana?s business activities s required the filing of Form(s) 1099 to
report payments she made during the tax year. In addition, Ms. Carroll drove
a 2012 Lexus purchased on January 1, 2012 for all of her business mileage.
She drove the vehicle a total of 10,605 miles during the year for all purposes.
Diana has written documentation to support the mileage amounts. She also
has access to another vehicle for personal purposes.
The Carrolls also received the following during the year:
from First Bank of New Jersey
Patterson, New Jersey School District $200
U.S. Treasury Bond
General Mills corporate bond
$400 2 Qualified dividend income from Rio Tinto
Qualified dividend income from Microsoft
Qualified dividend income from Cooper Tire
Qualified dividend income from Cardinal Health
Qualified dividend income from Union Pacific
Qualified dividend income from Procter & Gamble
Qualified dividend income from PepsiCo
Qualified dividend income from Kellogg
Qualified dividend income from Abbott Labs
Qualified dividend income from 3M
Dividend income (not qualified) from China Fund $1,500
$2,000 The Carrolls did not own, control or manage any foreign bank accounts nor
were they a grantor or beneficiary of a foreign trust during the tax year.
The Carrolls had the following activity in their brokerage account during the
year (all transactions were reported on a Form 1099-B. Basis information on
each stock sale was reported to the IRS):
Sold 2,000 shares of Microsoft
Sold 75 shares of Apple, Inc.
Sold 350 shares of Cooper Tire
Sold 1,000 shares of Cardinal Health
Sold 50 shares of Union Pacific
Purchased 100 shares of Procter & Gamble
Purchased 350 shares of Cooper Tire
Purchased 350 shares of PepsiCo
Purchased 300 shares of Kellogg
$21,000 Relevant tax basis/holding period information related to sales of securities in
the current year:
Purchased 2,000 shares of Microsoft on 5/1/15 for $21,000
Purchased 200 shares of Apple, Inc. on 3/8/2012 for $90,000
Purchased 300 shares of Cooper Tire on 1/12/2011 for $9,000
Purchased 50 shares of Cooper Tire on 6/28/15 for $2,000
Received 1,000 shares of Cardinal Health from Diana?s father as a gift on
10/10/98. Her father?s basis in the stock at the time of the gift was $7,000.
Fair market value of the stock at the date of the gift was $41,000
Purchased 100 shares of Union Pacific on 9/5/13 for $6,000
The Carrolls have a $43,000 long-term capital loss carryover from their prior
The Carrolls received a New Jersey state income tax refund of $400 in May of
2014. The Carrolls received the refund because they had overpaid their New
3 Jersey state individual income tax in 2014. On their 2014 Federal income tax
return, the Carrolls deducted and received tax benefit for all of the state tax
income taxes they paid in 2014.
Diana is a 10% owner in an advertising agency named Bright Ideas (?BI?)
(EIN 20-1234567). BI is a Subchapter S corporation. The company reported
ordinary business income for the year of $150,000. Diana received a K-1
from BI reporting her allocation of this business income. Sarah acquired the
stock several years ago. Her basis in the stock before considering her 2015
income allocation was $92,000. Sarah is a passive owner with respect to this
Diana is also a 20% owner in Natural Sunshine, Inc. (?NS?) (EIN 24-9876543).
NS is a Subchapter S corporation. The company reported an ordinary
business loss for the year of ($80,000). Diana received a K-1 from BI
reporting her allocation of this business loss. Sarah acquired the stock
several years ago. Her basis in the stock before considering her 2015 loss
allocation was $45,000. Sarah is a passive owner with respect to this entity.
Joseph received 5,000 shares of restricted (common) stock from his employer
on July 1, 2015. The terms of the restricted stock grant are such that if
Joseph is still employed by Alternative Energy on July 1, 2019 the entire
5,000 shares will vest and become his property. Joseph, upon the advice of
his tax advisor, prepared and filed an IRC Section 83(b) election on July 8,
2015. On July 1, 2015, shares were valued at $5 per share. Joseph
estimates the value of the shares in five years will be at least $150 per
share. Joseph notified Alternative Energy about the IRC Section 83(b)
election in a timely manner. None of the income tax consequences of this
restricted stock grant was included in the $118,325 reported as part of
Joseph?s gross wages (see above).
In May, Joseph was injured in a home accident. The injury prevented Joseph
from working for about a month. During this time, Joseph received $15,000
in disability payments attributable to a disability insurance policy. The
disability policy premiums were paid on Joseph?s behalf as a nontaxable
The Carrolls paid the following expenses during the year:
Dentist (unreimbursed by insurance)
Doctors (unreimbursed by insurance)
Prescriptions (unreimbursed by insurance)
Real property taxes on residence
Vehicle property tax based upon value
Mortgage interest on principal residence
Margin interest paid to broker $1,500
4 Contribution to United Way
Contribution to American Cancer Society
Contribution to neighborhood drive to oppose development project
Contribution to the Temple Mount Synagogue
Fee paid to Mouser, Johnson, and Hintze CPAs for tax preparation $450
The Carrolls also donated clothing, electronics, furniture and other household
goods to the Salvation Army of Pleasantville, New Jersey on April 15, 2015.
Estimated thrift value of the goods donated was $275.
On September 1, the Carrolls paid $200 in foreign taxes attributable to the
dividend received from the China Fund.
The Carrolls would like to contribute to the Presidential Election Campaign.
The Carrolls would also like to receive a refund (if any) of tax they may have
overpaid for the year. Their preferred method of receiving the refund is by
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