Final tax return presentation Assignment

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Bahauddin Zakaria University, Multan *

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410

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Finance

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May 10, 2024

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docx

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Points 20 points Exceed standards Meet standards (High) Meet standards (Low) Does Not Meet standards No Effort Content 10 points Content is correct and presented in an understandable and logical manner Content is effective in explaining the material presented Authoritative guidance is properly cited Organization / formatting 5 points Clearly organized Appropriate level of detail Delivery 5 points Correct sentence structure, grammar, syntax, punctuation, and spelling Written Project Presentation Rubric You will be explaining your final Shackleton tax returns (both federal and WI). You can explain them in any manner or order you like, but you should make sure you cover all the numbers on the tax return as well as the situations in the three Shackleton return assignments that did not require entries in the tax return. Ernest & Emily Shackleton This assignment covers chapters 4 & 5 Tax year: 2022 Use the following information to complete a tax return for Ernest and Emily Shackleton. We will use the Shackleton’s return, and keep adding to it over several chapter. Before you start each Shackleton tax return, I highly recommend, that you go back and correct mistakes in your previous Shackleton returns, save the return, and copy it to a different name. This will make your life much easier in the long run. There are also questions at the end of this document to submit as part of this assignment. You will submit two documents, 1) the tax returns (federal and state in pdf format), and 2) responses to questions. You can submit multiple documents to a single Canvas assignment. I will see all your submissions.  Prepare federal and state tax returns for Ernest & Emily Shackleton based on the following information.

 Deliverables: Submit at a minimum , federal form 1040 with Schedules 1, B, E (pg 2); form 8812, and form 8582. And WI form 1 (4 pages) with schedules AD, SB, an WD. Your software will produce other forms; please turn those in as well, but if your software did not generate the forms and schedules listed above, you probably have something wrong. All tax returns will be submitted via Canvas.  In addition to the tax returns, submit a separate paper via Canvas responding to the questions and prompts after the tax return data.  Forms you submit must be fileable (IRS approved forms), and must be in pdf file format . Make sure you are working in the appropriate tax year. Anything you submit must be acceptable to the IRS. If the IRS wouldn’t accept it, neither will I. One exception to this rule is that I will accept a flags or other warnings across the pages saying “do not file” or “client copy” or some similar warning.  ProConnect software is provided, but if you have access to other tax software and prefer to use it please contact me.  If you need to enter driver license numbers or other identification, you can make it up. TAX YEAR 2022 Ernest Shackleton Emily Shackleton Edward Shackleton SSN 356-49-1234 SSN 356-49-2345 SSN 356-49-3456 Born 3/15/1984 Born 6/10/1983 Born 8/7/2017 Occupation Explorer Occupation Teacher Occupation Kid Relationship Husband Relationship Wife Relationship Son Phone 920-605-0174 Phone 920-605-0174 Phone 920-605-0174 Address 800 W Main St. Address 800 W Main St. Address 800 W Main St. City, St Whitewater, WI City, St Whitewater, WI City, St Whitewater, WI Zip Code 53190 Zip Code 53190 Zip Code 53190 Residency Full year WI Residency Full year WI Residency Full year WI Health insurance from employer Health insurance from employer Health insurance Parents No foreign bank accounts No foreign bank accounts No foreign bank accounts

 You did not prepare the Shackleton’s taxes last year and they can’t find last year’s tax returns.  Last year Ernest & Emily filed MFJ and they took the standard deduction  You should ask me any question you would ask the taxpayers. If you don’t think you have the information you need to complete the tax return, ask!  We will not study credits until chapter 13, but the software will generate a refundable child tax credit of $2,000 on form 1040 line 19. Form W2 39-1542255 2022 Box 1 21,000 Box 2 2,400 Box 3 21,000 Box 4 1,302 Box 5 21,000 Box 6 305 Box 13 Box 12 a DD 10,250 Box 13 codes retirement plan Box 12 b Box 12 c Box 12 d Box 15 State WI State ID WI0360001234 Box 16 State wages 21,000 box 17 State income tax 1,000 Whitewater, WI 53190 Scottish Geographical Inc. 1 South Kildare St Whitewater, WI 53190 Ernest Shackleton 800 W Main St. Form W2 39-3753366 2022 Box 1 54,000 Box 2 7,100 Box 3 54,000 Box 4 3,348 Box 5 54,000 Box 6 783 Box 13 Box 12 a DD 2,700 Box 13 codes retirement plan Box 12 b Box 12 c Box 12 d Box 15 State WI State ID WI0360001234 Box 16 State wages 54,000 box 17 State income tax 2,000 Whitewater, WI 53190 Whitewater School District 123 Education Court Whitewater, WI 53190 Emily Shackleton 800 W Main St.

2022 1 Interest income 475 2 Early withdrawal penalty 06-1752217 3 Interest on US savings bonds and Treas. Obligations 4 Federal income tax withheld 5 Investment expense 6 Foreign taxes paid 7 Ernest Shackleton 8 Tax exempt interest 210 9 10 11 Whitewater, WI 53190 12 13 14 15 16 1099-INT INVESTMENT COMPANY 1 Justice Cir Whitewater, WI 53190 NOTE: LINE 8 INTEREST, $100 IS FROM WI GENERAL REVENUE BONDS, THE REMAINDER IS FROM IL GENERAL REVENUE BONDS. 800 W Main St. Hint: how does this form affect the WI tax return? 1a Ordinary dividends $500 2022 1b Qualified dividends $150 1099-DIV 2a Capital gains $615 2b 09-1453315 2c Section 102 gain distr. 2d Collectibles (28%) gain 2e 2f 5 3 Nondividend distributions 4 Fed inc tax withheld 5 Section 199A dividends 6 7 Foreign tax paid 8 9 10 11 12 13 State 14 State ID 15 State tax withheld 1099-DIV 800 W Main St. Whitewater, WI 5319 VANGUARD PO BOX 982901 EL PASO, TX 79932 Emily Shackleton Hint: how does this form affect the WI tax return?

Additional information for completing the Shackleton’s tax returns. (you don’t have to send me any responses to these questions, they are only for the tax return) 4-1. The Shackleton’s lent some money to their friend, Robert Scott on 7/1/22 . The contract calls for annual interest payments of $200 per year to be paid each January 1 st . They will receive the 1 st interest payment on Jan 20, 2023. Of course, Scott did not send them any paperwork. Note: if interest is taxable, make sure it shows up on form 1040 line 2b whether or not the taxpayer has received a form. 4-2. The Shackleton’s purchased a commercial bond from from Big Piney Investments, 15 Byron Ave, Whitewater, WI 53190, ein 06-1523744. The bond is a $1,000 face value, zero interest rate, original issue discount bond. They purchased the bond for $600 on 2/1/ 2020 . The bond matures on 12/31/ 2025 . Interest calculate for 2022 would be $95. I have not provided any paperwork for his transaction. You must decide if any entries are required on the 2022 tax return. 4-3. Ernest purchased 110 shares of CAT stock 10/30/2022 for $270 per share. Ernest was told he purchased the stock ex-dividend. He notes his investment advisor tells him that this stock pays dividends of $2.00 per share each February, May, August, and November. Caterpillar is expected to continue this practice. 4-4. Ernest was divorced from his first wife on 11/15/2017 and married Emily in 2020. Each month he receives $200 alimony and $500 child support. 4-5. Emily purchased an annuity for $50,000 from a company named “Annuity Bank”, ein 09-3765988. The annuity pays $1,000 per month for 60 months. Payments started on 1/1/2021 and will continue through 12/1/2025. Detail of the transaction are reported to Emily on form 1099R. Hint: On the 1099R input screen, there is a top horizontal menu listing Annuities as one of the choices. It’s easy enough to calculate by hand. I recommend you try it. For the best results, round your exclusion percentage to 3 decimal places. 4-6. Ernest is a partner in Pine Bluffs partnership, 200 Indigo La., Pine Bluffs WY, 82082, ein 26-1477321. The partnership builds ship sails. Pine Bluffs files it’s 1065 informational return with the IRS in Kansas City, MO. This is a passive activity . I did not provide you with a K-1(1065), but if you had one, you would $900 in box 1, representing his distributive share of ordinary income from a partnership. The rest of the boxes are empty. Ernest received no cash from the partnership in 2022 . 4-7. Emily owns stock in Cokeville Corp, 100 Marbleton St., Encampment, WY 82325. Cokeville is an S- corporation with ein 06-1723351; Cokeville files form 1120S with the IRS in Ogden UT. This is a

passive activity ; Cokeville does not deal in real estate. I did not provide you with a K-1(1120S), but if you had one, you would see that the box 1 amount is $700, representing Emily’s distributive share of ordinary income from an S-Corporation. The rest of the boxes are empty. Emily received a distribution from Cokeville on 2/15/ 2022 , a check for $400. 4-8. Ernest received $9,000 in Social Security payments reported in box 5 of form SSA 1099. The box 3 description notes that $800 was withheld to pay health insurance premiums. No income tax was withheld. Hint, How should these entries affect your WI tax return?. -9. Ernest received $2,500 inheritance when an uncle passed away. 4-10. A great aunt gave Emily $3,100 as a gift. 4-11. Emily was called to jury duty and receive $250 for serving. Chapter 5: Exclusions to Income 5-1. The Shackleton’s filed their 2021 income tax returns in February of 2022 . On 3/22/ 2022 , they received a $1,000 check from the WI Dept of Revenue for a refund of 2021 WI income tax. In January 2022 , they received a 1099G from the WI dept of revenue showing they had received the $1,000 refund. 5-2. 2022 was a bad year in some ways. Both Ernest and Emily’s fathers passed away.  Emily, as the beneficiary of her father’s life insurance policy, received a lump sum payment of $8,500. The policy was with Midwest Insurance Co, 5 Opal Dr, Whitewater, Wi 53190, ein 12- 3754217.  Ernest was the beneficiary of his father’s life insurance policy. The policy was with Yoder Insurance Co, 12 Upton Circle, Whitewater, Wi 53190, ein 27-6543752. The lump sum amount (face value of the policy) was $20,000. Instead of collecting the $20,000 in one payment, Ernest chose to take 5 annual payments of $5,000. He received $5,000 in 2022. Ernest has not received any tax documents from the Yoder Insurance. 5-3. Emily was injured in a car accident in 2019 , she injured her leg in the accident and had to take some time off work. The matter went to trial in early 2022 , and in November 2022, Emily received a check for $10,300. $2,000 of the check was to cover medical bills for her leg, $5,500 to compensate her for time off work, and $2,800 was punitive damages because the other driver was reckless.

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