Assignment: Tax Return Problem
Directions: Prepare 2017 federal income tax return, including all necessary schedules and attachments, for Donald and Melania Trump using the following information:
Social Security Numbers: Donald- 123-45-6789, Melania-333-222-111
Son -Barron - age11 -SS# 555-77-6666. Melaniapaid $6,000 in child care expenses for Barron while she worked.
Salary: Donald- $35,000, Melania - $30,000
Barron - $600
Interest from Mellon Bank - $3,000, Interest on New York municipal bonds - $2,600
Dividends on Trump, Inc.stock - 6,000
Sold 1,000 shares of IBM stock for $8,000 on January 15, 2017. Shares were purchased on January 15, 2001 for $3,000.
Melania had the following operating results from her modeling business, which she operated as a sole proprietorship:
Sales income - $12,000
Office supplies - 4,000
Advertising Expenses - 1,000
Business clothing - 3,000
Donald and Melaniarented out the old family home in New Yorkfor the entire year:
Rental income - $14,000, Mortgage interest - $7,000
Depreciation - The house was purchased in 12/01/15 at a cost of $100,000 and is depreciated on a straight line basis over 27.5 years. Accumulated Depreciation from prior years was $3,787.
Mortgage interest on the white house owned by Donald and lived in by family - $5,000
Real Estate taxes on the white house - $4,000;
State income taxes withheld fromDonald's wages - $2,000
Federal income taxes withheld fromDonald's wages - $6,000
New York City sales tax paid by Donaldwas $2,800.
State income tax refund of 2016 overpayment received in 2017 - $4,000 (2016 state income taxes were fully deductible on the 2016 tax return.)
Donaldhad $9,000 of business travel expenses, which were reimbursed by his employer.
Melaniapaid $6,000 in college tuition for graduate school and $500 for eyeglasses.
Donaldcontributed $3,000 to the United Way, and $2,000 to FordhamUniversity during the year.
Michelle paid $4,000 of student loan interest.
Notes
1. Make up any non-financial information needed to complete the tax return that is not provided above.
2. Use 2016 IRS tax return forms where 2017 forms are not yet available.
To potentially assist in improving one's grade to a "C" or "D", complete a separatetax return forDonald and Melania, adding the additional information found below:
Sold 1,000 shares of GM stock for $4,000 on January 15, 2017. Shares were received as a gift from mother, Mary Ann, on January 15, 2013. Mary Ann purchased stock on January 1, 1999 for $9,000. The value of the stock on January 15, 2013 was $6,000.
Donaldreceived $23,000 in social security benefits during the year.
Donald paid $4,000 in alimony and $8,000 in child support to his first wife, Ivanka.
Melania's law business purchased the following assets in 2017:
7 year equipment - $2,000 on July 31
5 year equipments - $1,000 on May 31
(Maximize her 2017 depreciation deduction.)
Melania's earrings were stolen on July 12. She purchased the earrings 4 years earlier for 7,000. At time of robbery, the earrings were valued at $8,000.
Unreimbursed medical expenses
- Dr. appointments for Donald and Melania- $6,000
- Dr. appointments for Barron- $5,000
- Prescription drugs - $2,000
- Melania's eye glasses - $500
- Medical insurance premiums - $1,500
Donald and Melaniaalso have a twenty year old daughter, Hilary.Hilary is a full-time graduate student and Donald paid $13,000 of tuition and 2,500 for food, on her behalf. Hilary had no other expenses during the year.
Donaldbought business suits for $5,000 that he wears only to the office and for official work events.
Donaldpays $2,500 in union dues related to his employment.
Melaniapaid $2,400 for professional licenses.
Donald and Melanialike to eat out and spent $5,000 at various restaurants in the D.C. area.