federal tax accounting Course project part II

Course federal
tax accounting
Course project
part II
I will attach
part one as well.
Use the
Part I assignment you completed previously.Correct
your Part I assignment mistakes, if any, based on the solution you were
provided by your instructor at the end of Week 4.Complete
the following additional paragraph items: 1 – 5Please also
examine the bullets on requirements to add that may pertain to these
paragraphs.State any
assumptions you are making in a separate memorandum attached to the return
Additional
paragraphs 1-5
Appendix E: Practice Set Assignments—Comprehensive Tax
Return Problems
Problem 1
Will S. (age
42) and Mari N. (age 41) Frost are married and live
at 426 East Twin Oaks Road, Sioux Falls, SD 57105. Will is the regional
manager for a restaurant chain (Moveable Feast),
and Mari is a self-employed architect. They
are calendar-year, cash-basis taxpayers.
1.
Will’s annual
salary from Moveable Feast is $82,000. He also earns
an annual bonus. The amount is determined in late
December, and Will receives it in
January of the next year. Will’s 2012 bonus was $6,000 (received
in 2013), and his 2013 bonus was $7,000 (received in
2014). Will is also paid a flat travel allowance of $16,000 per
year. The allowance is to cover his expenses
in visiting restaurants in his region to conduct inspections,
consult with the local managers, and recruit potential
hires. Although Will maintains substantiation of his travel, he
is not required to account for these expenses
to Moveable Feast. Will participates in his employer’s
group health insurance plan to which he contributed
$3,600 in 2013 for medical coverage. These
contributions were made with after-tax dollars. The
health plan covers Will, Mari, and their two dependent
children. Moveable Feast does not provide
any retirement benefits, but it has established
a §401(k) plan to enable its employees to make
voluntary contributions. Will contributed $10,000 to the plan in
2013. The company provides an office for Will’s use
that is located at 110 North Reid Street, Suite
217, Sioux Falls.
2.
Besides
the business use of his car (see item 3 below),
Will’s out-of-pocket employment-related expenses
for 2013 are as follows:

Airfare

$2,600

Lodging

3,200

Meals

3,400

Entertainment

800

Car rentals,
limos, taxis

600

Parking
and tolls

300

Subscriptions
to trade journals

120

Dues
to trade association

80

Business
gifts

550

E-1E-2
While on
business trips in his car, Will was cited for speeding several
times and paid related fines totaling $620. Will presented
the business gifts in late December
to managers of thetop 11 restaurants in his region,
with each manager receiving a $50 gift card to a
national retailer.
3.
On March 5,
2012, Will purchased a new Ford Focus for use in his job.
The car cost $24,000 (including sales tax), with no trade-in
involved. The car was driven 14,000 miles in 2012
and 18,000 in 2013 with usage as follows: 20% for commuting to the
office and 80% for business trips. The mileage
for 2013 was evenly distributed throughout the year.
Will uses the actual operating cost method, and for
depreciation purposes, uses 200% declining-balance
with a half-year convention. In addition, Will did not claim any
§179 expensing or additional first-year depreciation
last year when he bought the car. (See Table
3 of the Instructions to Form 4562.) Will’s expenses
related to operating the Ford Focus for 2013 are
as follows:
Gasoline $2,900
Oil change and
lubrication 150
Auto
insurance 1,800
Repairs 400
Auto club
dues 160
License and
registration 120
Interest on car
loan 900

4.
Mari Frost is a licensed architect who
works part time on a consulting basis. Her professional activity code is
541310. Her major clients are real estate developers (both residential and
commercial) for whom she prepares structural designs and construction plans.
She also advises on building code requirements regarding the renovation and
remodeling of existing structures. Mari collected $52,000 in consulting fees
during 2013. This total includes a $3,000 payment for work she performed in
2012 and does not include $5,000 she billed in December for work performed in
late 2013. In addition, Mari has an unpaid invoice for $6,000 from a client for
work done in 2011. This client was convicted of arson in August 2013 and is now
serving a five-year sentence in state prison. Mari feels certain that she will
never collect the $6,000 she is owed.
Mari does her work at the client’s premises
or in her office at home (see item 5 below). Her business expenses for 2013 are
as follows:

Drafting
supplies

$4,800

Reproduction
materials (e.g., molds, models, photos, blueprints, copies)

3,200

On-site
work clothing (e.g., hip boots, safety glasses, safety helmet)

800

Professional
license fee

400

Subscriptions
to professional journals

250

Dues to
professional organizations

240

In addition,
Mari drove the family Acura (purchased on June 7, 2012) 940 miles on her job
assignments. She uses the standard mileage method to deduct business costs
related to the Acura. During 2013, Mari drove the car a total of 10,000 miles
5.
When the Frosts purchased their home on
February 2, 2012, they set aside 300 square feet (out of a total of 2,400
square feet) of living space for Mari’s office. As of January 1, 2013, the home
had an adjusted basis of $240,000 for purposes of line 36 of Form 8829 (of
which $40,000 is attributable to the land)—the fair market value of the
property is in excess of this amount. Relevant information concerning the
residence for all of 2013 follows:
Homeowner’s
insurance $3,200
Repairs and maintenance 1,800
Utilities 6,200
Painting
(office area only) 2,500
The cost of
Mari’s office furniture and equipment was previously deducted under §179 in the
years these assets were acquired. On June 29, 2013, she purchased a fireproof
file cabinet for $800 to safeguard the blueprints of her structural designs and
construction plans. If possible, Mari prefers to avoid depreciating capital
expenditures

.