31 Aug Income tax
All you need to do is to answer the number that I have circle on the forms. I have compeleted the SCHEDULE C form already. The SCHEDULE C aslo upload and below here is the instruction. All you need to do is to answer the number that I circle on the form.
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Comprehensive Problem 1 – Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B.
Noah and Joan Arc’s Tax Return
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Note: This problem is divided into three parts. You will need to complete some of the forms in the other parts in order to determine the amounts to be used on Form 1040. Some of the data information will be reproduced in the other parts for convenience. |
Noah and Joan Arc live with their family in Dayton, OH. Noah’s Social Security number is 434-11-3311. Noah was born on February 22, 1985, and Joan was born on July 1, 1986. Both enjoy good health and eyesight. Noah owns and operates a pet store and Joan is a firefighter for the city of Dayton.
1. The Arcs have two children, a son named Shem (Social Security number 598-01-2345), born on March 21, 2013, and a daughter named Nora (Social Security number 554-33-2411), born on December 3, 2016. They received a statement from Roundup Day Care Center (located on a separate tab) regarding the cost of child care provided for Nora.
2. Joan and Noah brought a folder of tax documents (see Forms W-2 and 1098). In addition, they received a Substitute 1099 Statement from Charlotte Squab Financial Services (located on a separate tab) regarding their stock transactions for the year.
3. Noah’s pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is “The Arc,” and its taxpayer identification number is 95-9876556. Since you handle Noah’s bookkeeping, you have printed the income statement from your Quickbooks software, shown in the table below. The Arc did not claim the COVID-related provisions for the employee retention credit or sick and family leave credits but Noah did defer his self-employment taxes related to The Arc. He estimates 77.5 percent of the profits can be allocated to the period March 27, 2020 through December 31, 2020.
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The Arc 95-9876556 Income Statement For the Year Ended December 31, 2020 |
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Revenue: |
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Gross Sales |
$143,500.00 |
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Less: Sales Returns and Allowances |
– |
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Net Sales |
$143,500.00 |
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Cost of Goods Sold: |
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Beginning Inventory |
$10,250.00 |
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Add: Purchases |
62,150.00 |
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$72,400.00 |
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Less: Ending Inventory |
10,000.00 |
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Cost of Goods Sold |
62,400.00 |
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Gross Profit (Loss) |
$81,100.00 |
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Expenses: |
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Dues and Subscriptions |
– |
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Estimated Federal Tax Payments |
7,500.00 |
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Estimated State Tax Payments |
3,800.00 |
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Insurance |
3,950.00 |
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Meals and Entertainment |
1,400.00 |
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Miscellaneous |
– |
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Payroll Taxes |
3,830.00 |
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Professional Fees |
1,710.00 |
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Rent |
8,420.00 |
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Travel |
1,230.00 |
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Utilities |
1,250.00 |
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Vehicle Expenses |
– |
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Wages |
25,110.00 |
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Total Expenses |
58,200.00 |
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Net Operating Income |
$22,900.00 |
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4. Detail of The Arc’s meals and entertainment:
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5. Travel costs are business related and do not include meals.
6. Noah and Joan paid the following amounts during the year (all by check):
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7. Noah has a long-term capital loss carryover from last year of $2,313.
8. Noah and Joan own a condo and use it as a rental property. The condo is located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. Noah provides the management services for the rental including selection of tenants, maintenance, repairs, rent collection, and other services as needed. On average, Noah spends about 2 hours per week on the rental activity. It was rented for 365 days. The revenue and expenses for the year are as follows:
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The home was acquired for $82,500 in 2004. No improvements have been made to the property.
9. The Arcs paid Ohio general sales tax of $1,076 during the year.
10. The Arcs received a $3,400 EIP in 2020.
Required:
You are to prepare the Arc’s federal income tax return in good form. You are not to complete an Ohio state income tax return. The following forms and schedules are required and may be found in parts 1, 2, or 3:
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Additional Instructions:
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Click here to access the tax table to use for this problem.
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Neither taxpayer wants to make a contribution to the presidential election campaign.
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The taxpayers elect to use the foreign tax credit in lieu of the deduction.
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Enter all amounts as positive numbers, except for a “loss.” If required, enter a “loss” as a negative number on the tax form.
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If an amount box does not require an entry or the answer is zero, enter “0”.
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If required, round your answers to the nearest dollar. On Schedule SE, use the rounded amounts in subsequent computations.
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Make realistic assumptions about any missing data that you may need.
