i finish the 1040 for those 5 questions, now fill out relevant schedule only for those 5 questionuse online instruction for questions, use final instruction only the last 3 pages.you can find the schedules on www.irs.govthe last two attachment are the 1040 and descriptions of those 5 questionsD’Amore-McKim School of Business
Northeastern University
ACCT 4414: Income Determination and Planning, Spring 2020
Tax return project: Instructions
To do: Working as a team, complete the 2019 Federal income tax return for the Weeks.
(Team assignments are posted on Blackboard)
Due BY EMAIL THURSDAY APRIL 9, 9:00A.M. BOSTON TIME
The deliverables:
1. The 2019 Federal income tax return for Martin and Kenzie Deeks. At a minimum, I would expect that
to include the following completed Federal forms:
1040
Schedules 1-3
Schedule D
Schedule A
Schedule E
Schedule B
Qualified dividends and capital gains worksheet
And any other forms that you deem appropriate. All forms should be handwritten (neatly).
Ignore the calculation of the Alternative Minimum Tax (Form 6251), the Net Investment Income Tax (Form
8960), the Additional Medicare Tax (form 8959) and the self employment tax (form SE) . (though you may
comment on them in your meeting outline if you wish)
2. A meeting outline. Assume that you will be meeting with Martin and Kenzie on April 10th and walking
them through the tax return. Prepare an outline that would guide that meeting. This deliverable should
include an overview of the tax return, a list of items considered, but not included in the tax return and
support as appropriate. It should also list planning ideas that might be considered for discussion with
the Weeks when the tax return is delivered such as points to consider for 2020 and beyond.
3. A peer evaluation: each student will prepare a peer evaluation of their group members; these will be
submitted separately TO ME VIA E MAIL BY THE DUE DATE ABOVE
To Note:
1. All forms and form instructions can be found at www.irs.gov. Use the 2019 version for all forms
2. THE FORMS ARE BE PDF INTERACTIVE MEANING THAT YOU CAN TYPE INTO THEM;
ACCORDINGLY, YOU SHOULD BE ABLE TO SHARE THEM ON GOOGLE DOCS AMONG YOUR
TEAM SO THAT ALL TEAM MEMBERS CAN MAKE CHANGES AS NECESSARY .Each member of
the team MUST sign form 1040 in the paid preparer use only area. Please print your name next to your
signature. ACTUAL SIGNATURE NOT REQUIRED-BUT BE SURE EACH TEAM MEMBERS NAME IS
ON THE RETURN.
3. Before you turn in your assignment, please make a copy of your final version.
4. Do NOT turn in any pages with writing or printing on the back side – it should all be one-sided.THE
RETURN SHOULD NOW BE SENT TO ME AS A PDF ATTACHMENT TO AN E MAIL.
5. Assemble forms and schedules in the proper order using the attachment sequence number shown at
the top of each one.
6. You may attach relevant work papers if you feel it will help explain the return. They should be attached
to the meeting outline. Be sure to highlight that they are NOT a part of the return itself.
7. Assume the family does not wish to depreciate any of the assets in their vacation home. The family will
depreciate only the home itself.
8. W-2 codes for line 12 may be found in the W-2 instructions.
9. Be sure to check all applicable boxes, fill in social security numbers and names at the tops of forms,
and answer all questions that apply to the taxpayers.
10. Assume the total combined original acquisition mortgages on the Weeks’ primary residence and
vacation home total less than $750,000
11. In addition to the discussion in the text, IRS Publication 527 on Residential Real estate may be helpful
in dealing with the Cape Cod property. Recognize also that the IRS has publications on many other
topics that may be useful.
1E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
12. As you prepare the return—you may well have questions on the facts as you would with any client
return. If you do have questions on any of the material—feel free to e mail me as if I were Marty Deeks
and I will respond. (please let me know your group and section number in your e mail.)
13. NOTE THAT THE SCHEDULE K-1 FROM HARDSCAPES VISIONS INC:
SAYS
LINE 17V
$150,000
Line 17W
$56,000
Line 17X
$480,000
Line 17A
$1,000
SHOULD SAY
Line 17V
$150,000
FOR PURPOSES OF SECTION 199A, SHAREHOLDERS
SHARE OF WAGES
$56,000
SHARE OF PROPERTY
$480,000
Line 17A
$1,000
2E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
D’Amore-McKim School of Business
Northeastern University
ACCT 4414: Income Determination and Planning, Spring 2020
Tax return project: FACTS
Martin and Kenzie Deeks live in Reading, Massachusetts at 345 Star Road, 02111 They are married and are
calendar year, cash basis taxpayers. Marty is a financial executive in an e-commerce company that sells
furniture and home-goods, Mail-Home Inc. He commutes to Boston for work. Kenzie teaches architecture part
time at a local university; she is also a shareholder in an architectural business from which she receives a K-1.
They have three children whom they support and who all live with them. Their identifying information is below
and their W-2’s are attached.
Name
Martin Deeks
Kenzie Deeks
Matthew Deeks
Sharon Deeks
Jamie Deeks
SSN
123-45-6789
123-45-6790
123-45-6791
123-45-6792
123-45-6893
Age
49
47
22
20
18
1. As shown on his w-2, Marty contributed $19,000 to his 401(k) account this year; his employer
contributed a matching amount of $1,250.
2. Marty’s company asked him to attend a course on introduction to interior decorating. The company paid
the $2,800 of tuition for him because the course is going to improve his job skills. This amount was not
included in his W-2 income.
3. As a reward for receiving a clean review from the PCAOB, Marty also received a free vacation for the
entire family to Aruba. The vacation was valued at $12,000 and was included in his W-2 income. Marty
has asked if this is appropriate.
4. In addition to these items, Marty’s employer provided him the following additional benefits in 2019
(none of these amounts are included in his W-2 income):
Item
Free parking at work
Reimbursements for CPA dues
Laptop for work
Amount
$225 per
month
$300
$1,400
5. Marty also received 2,000 restricted shares of Mail-Home Inc stock: the stock cliff vests in 5 years.
The fair market value of the stock on the date of receipt was 1$ per share. Marty informed you that he
had filed an 83(b) election with respect to these shares 10 days after he received them
6. All 3 of the kids are full time students; Matthew and Sharon are in college. They each worked part time
jobs, with Matthew making $5,500 for the year and Sharon making $3,500. Marty and Kenzie paid the
tuition for Matthew and Sharon; Matthew was $10,000, Sharon was $7,500. Each received a 1098-T.
None of the kids had any investment income.
7. Kenzie has a 40% ownership stake as a shareholder in Hardscapes Visions Inc (HVI) a landscaping
architectural firm operating as an S corporation. The firm designs landscapes for big building projects
3E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
all over New England. Kenzie’s K-1 is attached. Kenzie serves as a Vice-President and is fully active in
the business.
8. On January 1, 2018 Frank and Molly purchased a second home at 37 Shore Road, Falmouth, Ma. The
property cost $550,000 (with 120,000 allocated to land). The home is rented out for most of the year.
9. In 2019, they spent 28 days in the vacation home and it was rented out for 337 days to people
spending short vacations on the Cape. They collected $48,000 in rental revenue in 2019. Assume they
actively participated in the rental decisions and authorizing repairs. They had the following expenses for
the vacation home in 2019
Rental Property Expenses:
Property taxes
4,600
Repairs
1,300
Insurance
2,800
Cleaning Service used all year
1,700
Utilities (heat and hot water)
9,100
Supplies and paper products
1,000
Mortgage interest
Advertising-Misc
15,200
8,700
10. Kenzie’s father, Liam (ss# 123-45-6780) used to live in a nursing home. However, the nursing home
burned down in March of 2018. Liam moved in with Marty and Kenzie on 4/15/2018 and has lived
with them since that time. Liam is a military veteran and no longer works full-time. However he did
some small jobs here and there for the local veterans’ center where he earned $5,000 in gross income.
Marty and Kenzie paid over half of his living expenses. Liam is a widower. Included in the amounts
paid by Marty and Kenzie are $21,000 of medical expenses.
11. When Kenzie’s mother died in 2014, she had a life insurance policy issued by Liberty Mutual with a
maturity value of $200,000. As the designated beneficiary of the policy, Kenzie picked a settlement
option of $25,000 annually, payable over ten years. In 2019, she received her annual distribution from
this policy. Liberty Mutual withheld $1,250 in federal taxes from the distribution.
12. Marty’s employer provides a health-plan for the family. Marty’s share of the monthly health insurance
premiums of $400 are withheld by his employer from his paycheck. In addition to the premiums, the
family incurred the other following expenses which were not covered by the insurance policy:
Medical Expenses:
Dental Expenses:
Cleanings for the whole family
Teeth whitening for Kenzie
Eyeglasses and contacts for the whole family
Acupuncture to relieve Kenzie’s chronic headaches (not covered
by insurance)
Gym membership fees for Kenzie
Prescribed medications
750
350
1,800
3,000
600
1500
13. Besides those previously noted, Marty and Kenzie had the following receipts for 2019:
Receipts:
Federal income tax overpayment for the year 2018
(they elected to apply to their 2019 taxes)
Loan repayment from Kenzie’s college roommate
Interest Income
2,000
6,000
4E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
Sovereign Bank Savings Account
Sovereign Bank CD
Bank of New York Mellon Corp Bonds
Massachusetts Turnpike Authority bonds
State of Massachusetts Education bonds
Northern Co dividend (qualified)
GE Corp . dividend (qualified)
1550
15000
800
2700
3500
1,130
1,570
14. Marty and Kenzie sold some of the shares in Northern Corp. that they were holding for investment. On
4/1/2019 they sold 4,000 shares for $64,000. They had purchased 1,800 shares on 6/19/2011 for
$18,000. They purchased 4,000 shares on January 7, 2018 for $32,000. Assume there have been no
stock splits during the time they held the stock. Assume their sales were NOT reported on a 1099-B.
15. On September 16, they donated their remaining 1800 shares in Northern Corp to. Boston Children’s
Hospital. The FMV of the stock on the date of the contribution was $28,800. .
16. They also made the following other contributions for which they have all the appropriate documentation:
Other Donations:
Cash to the American Red Cross (987 Help St.)
Cash to their college alma mater (where they met)
1000
1500
Ignore any 30% or 20% limitations.
17. In 2018, Marty and Kenzie had sold stocks held as investments that had declined in value. As a result,
they recognized a long term capital loss of $15,000 It was their only 2018 capital transaction.
18. Marty and Kenzie had the following other expenses:
Other Expenses: all 2019 unless otherwise noted
Income tax due on 2018 Mass. state income tax return – paid in
March 2019
Excise tax on Kenzie and Marty’s cars (based on value)
Property tax on Reading home
Kenzies’ student loan interest from undergrad
Interest on loan for Marty’s car
Mortgage interest Reading home
Federal 2019 estimated tax payments $8000/quarter
Tax preparation fees
$1,000
1250
7000
4,400
850
6000
32,000
1770
19. Marty and Kenzie do not have any foreign bank accounts or trusts, and they don’t wish to donate to the
presidential election campaign. For the past several years, they have itemized their deductions. Their
itemized deductions in 2018 totaled $48,456. If they have a refund due, they would prefer having it
credited against their 2020 taxes.
20. Kenzie’s uncle, who lived in San Francisco, passed away in early 2019. He left his condo (his primary
residence) to Molly. The fair market value on the date of death was $770,000. Frank and Molly
arranged to sell the condo given the fact that it was 3,000 miles away. The sale closed in November.
After clean up expenses and brokerage commissions, the sale netted $795,000.
5E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
21. Marty’s ’ Aunt Tawna gifted to the couple, in December, 2018, an antique violin. Tawna had paid
$100,000 for it 10 years ago; at the time of the gift, the value had decreased to $75,000. Marty and
Kenzie sold it in November, 2019 for $70,000.
D’Amore-McKim School of Business
Northeastern University
ACCT 4414: Income Determination and Planning, Spring 2019
Tax return project:
Suggested format for client meeting outline
Martin and Kenzie Deeks
Meeting Outline
April 10 , 2020
I.
II.
2019 returns
A. Balance due/overpayment
B. Compared to last years return
i. (not enough info, placeholder only)
C. Highlight of issues addressed
Planning for 2020
A. Any changes in facts occurring?
i. Kids
ii. Jobs
B. Retirement planning thoughts?
C. Tax law changes anticipated?
D. Economic changes?
6E:4414 Spring 2020Tax return project 2020ACCT 4414 tax return instructions sp 2020 UD FOR ONLINE.docx
671119
2019
Schedule K-1
(Form 1120-S)
Department of the Treasury
Internal Revenue Service
beginning
/
/
Part III Shareholder’s Share of Current Year Income,
Deductions, Credits, and Other Items
1
Ordinary business income (loss)
/
2
Net rental real estate income (loss)
3
Other net rental income (loss)
4
Interest income
2019
ending
/
Information About the Corporation
13
Credits
14
Foreign transactions
150000
1000
5a Ordinary dividends
A
Corporation’s employer identification number
B
Corporation’s name, address, city, state, and ZIP code
04-123456
5b Qualified dividends
Hardscapes Visions, Inc
150 Central St
Peabody, Ma 02390
C
OMB No. 1545-0123
Amended K-1
For calendar year 2019, or tax year
Shareholder’s Share of Income, Deductions,
▶ See back of form and separate instructions.
Credits, etc.
Part I
Final K-1
6
Royalties
7
Net short-term capital gain (loss)
8a Net long-term capital gain (loss)
IRS Center where corporation filed return
Andover, Ma
Part II
8b Collectibles (28%) gain (loss)
Information About the Shareholder
8c Unrecaptured section 1250 gain
D
Shareholder’s identifying number
E
Shareholder’s name, address, city, state, and ZIP code
123-45-6790
9
20000
Kenzie Deeks
345 Star Road
Reading, ma 02111
Shareholder’s percentage of stock
ownership for tax year . . . .
.
.
.
40
10
Other income (loss)
15
Alternative minimum tax (AMT) items
11
Section 179 deduction
16
Items affecting shareholder basis
12
Other deductions
D
65000
C
7500
%
For IRS Use Only
F
Net section 1231 gain (loss)
17
Other information
V
150000
W
56000
X
480000
A
1000
18
More than one activity for at-risk purposes*
19
More than one activity for passive activity purposes*
* See attached statement for additional information.
For Paperwork Reduction Act Notice, see the Instructions for Form 1120-S.
www.irs.gov/Form1120S
Cat. No. 11520D
Schedule K-1 (Form 1120-S) 2019
Schedule K-1 (Form 1120-S) 2019
Page
2
This list identifies the codes used on Schedule K-1 for all shareholders and provides summarized reporting information for shareholders who file Form 1040
or 1040-SR. For detailed reporting and filing information, see the separate Shareholder’s Instructions for Schedule K-1 and the instructions for your income
tax return.
1.
Ordinary business income (loss). Determine whether the income (loss) is
passive or nonpassive and enter on your return as follows:
Report on
Passive loss
See the Shareholder’s Instructions
Passive income
Schedule E, line 28, column (h)
Nonpassive loss
See the Shareholder’s Instructions
Nonpassive income
Schedule E, line 28, column (k)
2. Net rental real estate income (loss) See the Shareholder’s Instructions
3. Other net rental income (loss)
Net income
Schedule E, line 28, column (h)
Net loss
See the Shareholder’s Instructions
4. Interest income
Form 1040 or 1040-SR, line 2b
5a. Ordinary dividends
Form 1040 or 1040-SR, line 3b
5b. Qualified dividends
Form 1040 or 1040-SR, line 3a
6. Royalties
Schedule E, line 4
7. Net short-term capital gain (loss)
Schedule D, line 5
8a. Net long-term capital gain (loss)
Schedule D, line 12
8b. Collectibles (28%) gain (loss)
28% Rate Gain Worksheet, line 4
(Schedule D instructions)
8c. Unrecaptured section 1250 gain
See the Shareholder’s Instructions
9. Net section 1231 gain (loss)
See the Shareholder’s Instructions
10. Other income (loss)
Code
A Other portfolio income (loss)
See the Shareholder’s Instructions
B Involuntary conversions
See the Shareholder’s Instructions
C Sec. 1256 contracts & straddles
Form 6781, line 1
D Mining exploration costs recapture See Pub. 535
E Reserved for future use
F Section 965(a) inclusion
G Income under subpart F (other
than inclusions under sections
See the Shareholder’s Instructions
951A and 965)
H Other income (loss)
11. Section 179 deduction
See the Shareholder’s Instructions
12. Other deductions
A Cash contributions (60%)
B Cash contributions (30%)
C Noncash contributions (50%)
D Noncash contributions (30%)
See the Shareholder’s Instructions
E Capital gain property to a 50%
organization (30%)
F Capital gain property (20%)
G Contributions (100%)
H Investment interest expense
Form 4952, line 1
I Deductions—royalty income
Schedule E, line 19
J Section 59(e)(2) expenditures
See the Shareholder’s Instructions
K Section 965(c) deduction
See the Shareholder’s Instructions
L Deductions—portfolio (other)
Schedule A, line 16
M Preproductive period expenses
See the Shareholder’s Instructions
N Commercial revitalization deduction
from rental real estate activities
See Form 8582 instructions
O Reforestation expense deduction
See the Shareholder’s Instructions
P through R
Reserved for future use
S Other deductions
See the Shareholder’s Instructions
13. Credits
A Low-income housing credit (section
42(j)(5)) from pre-2008 buildings
B Low-income housing credit (other)
from pre-2008 buildings
C Low-income housing credit (section
42(j)(5)) from post-2007 buildings
See the Shareholder’s
D Low-income housing credit (other)
Instructions
from post-2007 buildings
E Qualified rehabilitation expenditures
(rental real estate)
F Other rental real estate credits
G Other rental credits
Schedule 3 (Form 1040 or 1040-SR), line
H Undistributed capital gains credit
13, box a
I Biofuel producer credit
J Work opportunity credit
See the Shareholder’s
K Disabled access credit
Instructions
L Empowerment zone employment credit
M Credit for increasing research
activities
}
}
}
}
Code
N Credit for employer social
security and Medicare taxes
O Backup withholding
P Other credits
14.
}
Report on
See the Shareholder’s Instructions
}
Foreign transactions
A Name of country or U.S.
possession
Form 1116, Part I
B Gross income from all sources
C Gross income sourced at
shareholder level
Foreign gross income sourced at corporate level
D Reserved for future use
E Foreign branch category
F Passive category
Form 1116, Part I
G General category
H Other
Deductions allocated and apportioned at shareholder level
I Interest expense
Form 1116, Part I
J Other
Form 1116, Part I
Deductions allocated and apportioned at corporate level to foreign source
income
K Reserved for future use
L Foreign branch category
M Passive category
Form 1116, Part I
N General category
}
}
O Other
Other information
P Total foreign taxes paid
Q Total foreign taxes accrued
R Reduction in taxes available for
credit
S Foreign trading gross receipts
T Extraterritorial income exclusion
U Section 965 information
V Other foreign transactions
15. Alternative minimum tax (AMT) items
A Post-1986 depreciation adjust…
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