Tax Accounting I: Individual Tax Return Project - Tax Return Forms

This assignment is a practical tax accounting project requiring the completion of a 2016 federal individual income tax return for Deborah Flores. The project involves filling out Form 1040, including pages 1 and 2, and Schedules A, B, C, and E, based on provided financial information. The student must manually complete the forms, using the 2016 tax rate schedule and specified assumptions for certain figures. The assignment covers various income sources, including wages, rental income, and self-employment income from a photography business, as well as deductions and credits. The project also addresses issues like dependency exemptions, interest income, and charitable contributions. The goal is to calculate the taxpayer's adjusted gross income (AGI) and total tax liability. The student is also required to analyze and determine the most advantageous filing status for the taxpayer.

Tax Accounting I Individual Tax Return Project
Please complete the required federal individual income tax return forms for the following
taxpayer. You must complete the forms neatly by hand. You may not use any tax return
preparation software. You can access the necessary forms online on Blackboard under
“Course Materials” or at www.irs.gov. You will need to complete Form 1040, pages 1 and
2; Schedule A, Schedule B, Schedule C, and Schedule E. Although the forms are for 2015,
please use 2016 amounts for personal and dependency exemptions, and for the standard
deduction if applicable. Ignore alternative minimum tax calculations and tax credits.
Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If
required information is missing, use reasonable assumptions to fill in the gaps.
Also:
 Please round all tax return entries to the nearest dollar.
 Please use the 2016 tax rate schedule in Appendix D of your text to calculate any tax
liability.
 AGI should equal $57,066 and total tax (line 63) should equal $3,858.- Check Figures
Deborah Flores has undergone some major changes in her life recently. In 2014, at the age of 46,
her husband, Roger, passed away. Deborah has not remarried as of the end of 2016. Deborah
currently lives in Springfield, Missouri. Deborah has three children (ages as of the end of the year):
Amelia (23), Carl (17), and Edward (14). Deborah would like to determine her federal income tax
under the filing status that is most advantageous for her.
Deborah reported the following information:
 Deborah’s social security number is 294-83-2845
 Amelia’s social security number is 824-84-8456
 Carl’s social security number is 824-34-9584
 Edward’s social security number is 824-56-2984
 Deborah’s mailing address is 1234 S. Bruin St, Springfield, MO 65807
The entire household had full year health insurance coverage. (See line 61, page 2 of Form
1040.)- Additional pointer on last page!
Amelia is single and a full-time graduate student at State University She received her bachelor’s
degree the year her father passed away. This year represents her fifth year of higher education
schooling. Amelia works as a graduate assistant at State University to help with some of her living
expenses. Amelia earned $2,300 in gross income during the year, and State University also
provided Amelia educational assistance benefits which paid for her tuition, books, and fees, totaling
$5,000. Deborah provided and paid for rent, food, clothes, medicine, and other support items for
Amelia that were valued at $12,700 for the year.

Deborah’s W-2 for the year reported the following:
Company Gross Wages Federal Income Tax
Withholding
State Income Tax
Withholding
LAND Development
Corporation
$46,435 $4,700 $700
Deborah’s employer withheld all applicable and appropriate payroll taxes.
Through work Deborah was provided with certain benefits as part of her employment:
 Group-term life insurance coverage of $50,000. Cost to cover Deborah for the company for
the tax year is $150.
 Access to the company photocopy machine. Deborah estimates she made $40 worth of
copies during the year primarily for use with her church group activities.
Deborah also owns a rental house, which she rented out for all of 2016. The following items relate
to the rental property:
 Rental income received $6,000
 Depreciation expense on the rental house $1,700
 Real estate taxes paid on rental house $ 600
On January 1 of last year, Deborah started a photography business in which she takes bridal and
wedding photographs. She does not do any of the professional printing. However, she provides all
of the original negatives to her clients on a USB drive as part of her service. This unique service
along with her skill and reputation has allowed her to earn additional money on the weekends
primarily in the summer to help support her daughter in college. Deborah rents all of the camera
equipment from a friend and does not currently own any equipment herself. The photography
business uses the cash method of accounting. The business did not have any obligation to file a
Form 1099 to any payee during the year. Deborah reported the following revenue and expenses for
her business for the year:
 Gross Revenue $6,800
 Photographic supplies $ 650
 Camera rental $1,500
Deborah Flores also received the following during the year:
Life Insurance Payment-Mutual Life (Mother’s passing) $150,000
Cash gift from her father $ 6,000
Interest income-First Bank of Springfield $ 210
Interest income-General Electric Bond $ 2,400
Interest income-Springfield School District Municipal Bond $ 2,200

Deborah did not own, control or manage any foreign bank accounts nor was she a grantor or
beneficiary of a foreign trust during the tax year.
Deborah paid or incurred the following expenses during the year:
Dentist (unreimbursed by insurance) $1,700
Doctors (unreimbursed by insurance) $ 500
Prescriptions (unreimbursed by insurance) $ 255
Real property taxes on residence $ 800
Mortgage interest on principal residence (Form 1098 received) $6,845
Cash Contribution to the American Lung Association $ 500
Cash Contribution to the Habitat for Humanity $1,000
Cash Contribution to Methodist Church of MO $3,000
Cash Contribution to State University $ 500
Deborah incurred self-employment taxes of $657 for her work as a photographer.
Deborah wants to contribute to the Presidential Election Campaign. She would like to
receive a refund (if any) of any tax she may have overpaid for the year. Her preferred method
of receiving the refund is by check.
Additional pointers for tutor to watch out:
1. For the health insurance coverage, just indicate a checkmark saying that insurance is
covered for the whole family on the line instructed on page 1.
2. For the contribution of Presidential Election Campaign, I just want to notify that you only
need to put a check mark on Form 1040 page 1 where it states Presidential Election
Campaign. You do not deduct the 3 dollars meaning it will not affect the overall cash
for the tax return. Please remember that. It was a tip given to me by my instructor.