COMPREHENSIVE TAX RETURN PROBLEM                     NOAH AND JOAN ARC'S TAX RETURN   Noah and Joan Arc live with their family at 4342 Josie Jo, Santee, California 92071

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COMPREHENSIVE TAX RETURN PROBLEM                     NOAH AND JOAN ARC'S TAX RETURN   Noah and Joan Arc live with their family at 4342 Josie Jo, Santee, California 92071. Noah's social security number is  434-11-3311; Joan's is 456-87-5432. Both are in their mid-thirties and enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city. 1. The Arcs have two children, a son names Billie Bob who is seven years old and a daughter names Mary Sue who is five years old. Billie Bob is in the second grade. The Arcs paid $2,800 to the Roundup Day Care Center to take care of Mary Sue while they worked. Because she is a firefighter, Joan was home in the afternoon to care for Billie Bob after school. 2. For the current year, Joan's W-2 from the city fire department showed the following: Wages (Santee Fire Dept.)     $27,000  Federal income tax withheld       4,050  State income tax withheld       1,200  Soc. Sec. & Medicare tax withheld      1,674 & 392   Blue Cross insurance premiums         750 Union dues  550          Noah made federal income tax estimated payments of $10,000 and state income tax estimated payments of $1,000 during the current year.    (The federal estimated payments were $2,500 per quarter and the state payments were $250 per quarter. The dates of each payment were 4/15/19, 6/15/19, 9/15/19 and 12/31/19). 3. Noah's pet store is located at 18542 Mission Road, Santee, CA, 92072. The name of the store is the "The Ark," and its taxpayer I.D. number is 987655678. The review and expenses for the year are as follows: Sales Revenue $144,000 Expenses: Supplies                                $62,000 Insurance             750 Accounting fees         1,800 Wages 25,000 Payroll taxes    2,250 Miscellaneous              2,700 (A)Depreciation (Form 4562)        7,200 Total Expenses 101,700 Net Income        $ 42,300     [ NOTE#2: This is a 2019 problem. Done to match the forms available. !!! ].    (1) See chapter 3 for the 2019 exemption amount. Ok to use the 2019 tax tables in your text. 4. Noah and Joan paid the following amount during the year (all by check) Political contributions (Mayor's office)          $  250 Church donations                 12,300 Real estate taxes on home          1,200 Home mortgage interest          12,000 Tax return preparation fees            350 Credit card interest             220 Automobile insurance premiums    600 Uniforms for Joan      125               (a) Compute the sales tax deduction and enter the amount on line 5 of the Schedule A   (use the pages A-3 to A-6 and A-14 to A-16 of the Form 1040, Schedule A instructions.  [ go to IRS.gov ] . Some were issued on the first day of class). Assume a   state sales rate of 7 1/4% (California) and a local rate of 2%.  5. Noah likes to invest in the stock market. During the year he sold the following securities:  Date Stock    Acquired  Date Sold Sales Prices Cost Basis Texaco 2/11/16        1/15/19   $4,500        $2,300 GM 9/30/18    2/05/19     6,000         5,000 IBM 10/02/96   1/07/19       12,000        1,600  The expenses of sale are included in the cost basis. Noah has a long-term capital loss carryover from last year of $2,300. [ see line 14, schedule D ] 6. During the year, Noah and Joan received the following dividends: Exxon        $320 Coca Cola  268 Texas Utilities 220 All stocks, bonds, and savings were purchased or established with community property. 7. Noah and Joan own rental property located at 6431 Gary Ct., San Diego, California 92115. The following is the revenue and expenses for the year: Rent income $10,500 Insurance            550 Interest expense (Mortgage)          7,000 Property taxes           1,000 Miscellaneous expenses   600 Depreciation ($15,000 in prior years)      3,000        Required: Although Noah and Joan do not believe their tax return will be unduly complicated, they do realize their limitations and come to you for assistance. You are to prepare their income tax return in good form, signing the return as the preparer. (1) Determine Noah and Joan's tax liability and net tax payable (or refund due) for 2019 assuming a joint return is filed  [ NOTE: This is a 2019 problem!!! ]. (2) Complete Forms 1040, 2441 and 8949 and Schedules 1, 2, 3, A, B, C, D, E, and SE. Omit Form 4562.    (3) Billie Bob's and Mary Sue's social security numbers are 111-72-1433 and 217-11-3411, respectively. (4) The tax I.D. no. and address of ROUND UP DAY CARE CENTER is 76-1234987 and 1200 Allen Rd., Santee, CA. 92073.