Stein Sample Tax Return 2
1. The Tax return is due on April 29 by 10:30 AM. Make sure to begin working on the tax return as soon as possible. If you wait until the day before you won't finish the assignment on time.
2. PREPARE the 2020 1040 TAX RETURN for Julian and Gabriella Stein. They file married filing jointly.
3. You may work in groups of two. You cannot have the SAME partner you had in the first tax assignment. You must inform me who your partner is. If you don’t have a partner I will assign you a partner if there is somebody who needs a partner.
If you submit a tax return in a group of two please only submit one tax return for the two. Make sure both names are on the tax return.
4. CHEATING: You may only work with one other student maximum. It is considered cheating to work with more than one other student.
5. The Stein Tax Return Assignment is similar to the Rodriguez Tax Return Assignment that is posted online. The Rodriguez Tax Return was assigned last semester. It includes some topics that are not covered in the Stein Tax Return. However, since we will be discussing those topics in the next couple of modules, please pay close attention to those other topics. Make sure to watch the videotaped lecture above to make sure you understand the proper procedure for preparing the tax return.
6. Read the instructions for the Stein tax return very carefully. Make sure to start out with the tax formula, then prepare an excel spreadsheet, then transfer the numbers to the tax forms. DO NOT PREPARE THE TAX FORMS UNTIL YOU FINISH THE EXCEL SPREADSHEET (you will surely complete the forms incorrectly).
7. When you fill in the forms you must USE THE “FILL AND SIGN” function on ADOBE. "Save As" a new file, otherwise your numbers on the form will not be properly saved.
8. Upon completion: UPLOAD YOUR FILE AS A PDF BUNDLE. How to combine and merge your files into one PDF:
9. In the PDF Bundle, place forms in the following order:
a. First Page: Please sign your name and write: “I promise that I have not given or received assistance on this tax return (unless working with one other partner). I am an ethical person and my personal integrity cannot be compromised. I have abided by the San Francisco State University Code of Ethics.”
b. Second Page: Attach WORKSHEETS listed in items 7, 8, 9, and 10 below.
c. Third: Attach all Tax Return Forms in the following order:
10. You can find the forms on i-Learn under the section “Forms”.
11. After you have completed the netting process for the sale of each asset in item 14 below, you will have the following columns remaining below. Complete the following worksheet on the Excel Spreadsheet in a similar manner to the other tax returns you have completed:
|Description ||Total Income||Ordinary Income ||LTCG 28% ||LTCG 25%||LTCG 0/15/20%|
|Note: this is where you enter all of the items from the tax formula |
12. You must calculate the appropriate amounts of depreciation for each asset and put them in the appropriate forms. Please complete the following chart for each asset:
|Asset Description ||Date holding period begins||Date Sold||Depreciable Basis||Cost Recovery Period for each Asset|| Show your calculation of Depreciation: ||Depreciation amount for each asset |
|Toyota Avalon |
| Pressing Machine|
|Packaging machine |
|Lg Dryer |
|Total Depreciation Sch C |
|Palm Springs Building |
13. For each asset that was sold please complete the following table.
|Sales of Prop||Dry Cleaning Machine||Palm Springs Building||Palm Springs Land||Painting ||Westinghouse|
|Amount Realized |
| Less 2019 Depr |
| Less 2020 Depr |
| = Adjusted Basis|
|Recognized Gain (Loss)|
|Character of Gain (loss)|
Ordinary? LTCG(L)? STCG(L)? 1231? 1245? 1250?
14. Complete the following table for each asset and show the netting process (use arrows). After you have completed the netting process below you can insert the results into the excel spreadsheet in item 11.
|Sale of Assets ||Ordinary Income||LTCG(L) 28%||LTCG (L) 25%||LTCG (L) 0/15/20% ||STCG (L)||1231 Gain/Loss|
|PS Land |
15. Show calculations for the automobile expenses and depreciation.
16. . If you don’t know how to treat a particular issue, go to IRS.Gov and search Publications to find the appropriate topic, or Google the question (make sure you find a source that you can trust such as the IRS.)
Instructions: Prepare the 2020 tax return for the Steins.
Julian Stein born 03/01/1960 (SS # 565-88-8888) and Gabriella Stein (565-44-4444) born 08/3/1962 file married/joint. They live at 3180 Laurel Avenue, Los Angeles, Ca. 90046.
Gabriella was a part-time accountant at Fielding and Stone, CPA’s. Her W-2 was as follows.
They financially support their daughter Frances (SS # 565-33-3333) who was born 08/03/2000. She attends university full-time at the University of Hartford. Frances earned only $3000 interest income during the year. She spent that amount on her own support and her parents provided $40,000 of support.
Gabriella worked as an accountant at UCLA. See the W-2 listed above.
Gabriella received a qualified dividend from Timeco of $7000 on 4/1/2020.
The Steins received interest income reported on a 1099 from Bimco of $6300.
Julian sold a Modigliani painting that he bought on 3/9/1995 for $200,000. Julian sold the painting 8/03/2020 for $245,000.
The Steins sold 1000 shares of Westinghouse stock on 10/9/2020 for $60,000. They purchased the stock on 12/19/2019 for $85,000.
Julian owns a dry-cleaning store, F & L Cleaning, at 3115 Santa Monica Blvd, Los Angeles, Ca. 90046. They have the following income and expenses for the store:
Assume Julian uses the half-year convention for all assets.
| || || |
|Expenses:|| || |
|Bank Service Fees (Misc)||1200|| |
|Business Insurance||3000|| |
|Business License||800|| |
|Los Angeles Business Taxes ||500|| |
|Delivery fees paid to independent contractors (contract labor) ||3500|| |
|Equipment rental||5000|| |
|Hazardous Waste Removal ||1000|| |
|Interest expense on business loan ||8000|| |
|Internet Service (Communication) ||900|| |
|Legal and Accounting Fees ||2000|| |
|Repairs and Maintenance||4000|| |
|Store Rent||60,000|| |
|Telephone ||1500|| |
Julian purchased a new pressing machine for his store on 3/1/2020 for $12,000. He chose to deduct the machine under Section 179.
Julian purchased a packaging machine on 2/02/2019 for $18,000. He used MACRS Depreciation and the ½ year convention. He continued depreciating it in 2020.
Julian sold an industrial sized LG dryer on 11/01/2020 for $7000. He bought it on 2/3/2019 for 15,000. In 2019 he deducted the entire $15,000 cost of the dryer under Section 179.
Julian purchased a Toyota Avalon (weight 7100 pounds) on 4/1/2019 for $39,000 (including all capitalized expenses). He drove it 10,000 miles for business and 8,000 for personal purposes. He chose the actual method in 2020. Below are his expenses for 2020.
| ||Dodge Durango |
|Auto Club Dues||100|
|Depreciation|| To be determined|
|Interest Expense ||750|
|Repairs and Maintenance||300|
|Vehicle Registration fee (personal property tax portion of fee) ||80|
|Parking fees when picking up supplies||250|
| || |
On 2/1/2019 Julian and Gabriella purchased a rental house at 1230 Palm Drive in Palm Springs for $500,000 (Land $150,000, Building $350,000). They actively managed the rental house. They sold the rental house on 11/22/2020 for $530,000 (Land $156,000, Building $374,000). The income and expenses of the rental house are as follows. Utilities were paid by the tenants. In 2019 the Steins had a passive activity loss from the property of $24,000 which they were not able to deduct. The $24,000 passive activity loss was carried forward to this year.
|Rental Revenue|| ||12,800|
| || || |
|Expenses: || || |
|Interest Expense||14,000|| |
|Property Taxes||5,200|| |
|Management Fees||2500|| |
|Insurance Expense ||600|| |
|Depreciation ||To be determined || |
|Repairs and Maintenance||1300|| |
The Steins took the standard deduction.
The Steins contributed $1000 to UCLA.
For 2020 the Steins paid Federal Estimated taxes of $30,000.
For solution, connect with our online professionals.