Case Scenario:
Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 23412, and her Social Security number is 123-45-6789. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1111. Karl lives with Ashley, and she fully supports him. Bill spent 2011 traveling in Europe and was not a college student. He had gross income of $4,655 in 2011. Ashley owns the Enterprises, LLC sole proprietorship, a data processing service (98- 7654321), which is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2011 Form 1040, Schedule C for Panda Enterprises shows revenues of $255,000, office expenses of $66,759, employee salary of $63,000, employee payroll taxes of $4,820, meals and entertainment expenses (before the 50% reduction) of $22,000, and rent expense of $34,000. The rent expense includes payments related to renting an office ($30,000) and payments related to renting various equipment ($4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Ashley personally purchases health insurance on herself and Bill. The premiums are $23,000 per year. Ashley has an extensive stock portfolio and has prepared the following analysis:
|
Stock
|
Number of
Shares
|
Date
Purchased
|
Date Sold
|
Per
Share
Cost
|
Per Share
Selling Price
|
Total
Dividends
|
|
Beige
|
10
|
10/18/10
|
10/11/11
|
$80
|
$ 74
|
$30
|
|
Garland
|
30
|
10/11/04
|
10/11/11
|
43
|
157
|
70
|
|
Puce
|
15
|
3/10/11
|
8/11/11
|
62
|
33
|
45
|
Ashley had $800 of interest income from State of Ohio bonds and $600 of interest income on her Wayne Savings Bank account. She received $25,000 of alimony from her former husband. His Social Security number is 123-45-6788. Ashley itemizes her deductions and had the following items, which may be relevant to her return:
|
Item
|
Amount
|
Comment
|
|
Unreimbursed medical expenses for
|
$1,786
|
Does not include health insurance
|
|
Ashley (all for visits to doctors)
|
|
premiums.
|
|
State income taxes paid
|
1,830
|
|
|
Real property taxes on personal
|
3,230
|
|
|
residence
|
|
|
|
Interest paid on home mortgage
|
8,137
|
The loan is secured by the residence
|
|
(Form 1098)
|
|
and was incurred when the home
|
| |
|
was purchased.
|
|
Charitable contributions
|
940
|
Cash paid to Ashley's church.
|
|
Sales taxes
|
619
|
Amount per sales tax table.
|
Ashley made a $21,000 estimated Federal income tax payment, does not wish any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2012 taxes. Compute Ashley's net tax payable or refund due for 2011. If you use tax forms for your computations, you will need Form 1040 and its Schedules A, C, D, and SE and Form 8949.