Accounting-T A X R E T U R N P R O B L E M Alan (66) and Cheryl (63) Hoover

T A X R E T U R N P R O B L E MAlan (66) and Cheryl (63) Hoover are married, file a joint return, and live at666 Real Tired Avenue,Willimantic, Connecticut 06626. Alan is an attorney. His Social Security number is 886-56-8935. Cheryl is asecond grade teacher. Her Social Security number is 200-40-8000. Alan’s office inthe home is 600 square feetand the total square footage of the house is 3,000 square feet. Alan and Cheryl purchased the house on January 6,2005 for $280,000, of which $ 40,000 is attributable to the land.They have a son, Ian (20), who lives with them, who they fully support, and who attended college full-time foronly the Spring 2012 semester (January-May). Ian earned $19,600 during the summer and fall. Cheryl’s motherThelma Gould (SS# 666-66-6666), who is age 71, lives with them for the entire tax year. Cheryl’s motherreceives $1,250 per month in social security benefits and has no other income or means of support except for herson-in-law Alan (Alan provides more than half her support)Additional information is as follows:Items: Amount•Alan – Gross earnings as self–employed attorney(Employer Federal ID number (EIN) 05-0678888) $110,000•Alan- Estimated taxes paid in during year4/15/12: $2,100….. 6/15/12: $2,100….. 9/15/12: $2,100….1/15/13: $2,135 8,435•Alan-Estimated state income tax paid during year 4,730•Ordinary dividends from GE stock 15,950•Interest on J.C. Penny Corp. domestic bonds 3,300•Savings account interest—Pioneer Savings Bank 700•Series EE bonds that matured in 2012 (used to pay for Ian’s tuition,books and fees; ½ is interest) 6,100•Interest on New York municipal bonds 3,450•Cheryl – Salary as teacher 45,400•Cheryl- Federaland FICAincome tax withheld during year 8,473•Home mortgage interest 15,600•Sales tax paid 3,115Alan’s Business ExpensesUse of auto: (Bought 2/15/12 $25,000)**Travel expenses:Office in the home:Total miles 28,000 Hotel $3,700 Office supplies-direct $890Business miles 22,000 Meals $ 820 Telephone – direct $1,100Parking $280 Entertainment of clients $1,080 Utlities – indirect $ 3,400Gas $9,000 Conference fee $1,000 Insurance -indirect $1,600Insurance $1,200 Laundry $150 Repairs – indirect $1,800Depreciation –car ? Transportation $ 500 Depreciation-home * ?*Depreciation rate for part use of home office is 2.461% Equipment cost*** $6,500per IRS rules (direct)**There was no element of personal pleasure included in thetravel.*** Equipment purchased 6/12/12Cheryl’s ExpensesProfessional dues $2,750Professional journals $1,500Uniform $1,650Alan’s ExpensesSalary to secretary $15,000FICA ?SUTA/FUTA 725ACC 416 Spring 2013 SilkoffAlan and Cheryl also own a duplex (8 Duped St, Willimantic, Ct 06226 that they managed themselves. Theproperty was purchased on 6/2/2008. It produced the following rental income and expenses (80%rental):ItemAmount(1) Gross rental income $9,200(2) Mortgage interest 6,300(3) Insurance 600(4) Repairs and maintenance 1,050(5) Real Estate taxes 1,200(6) Utilities 1,850(7) Homeowners’ association dues 2,475(8) Depreciation ?Contribution to a traditional IRA – Alan $7,000Rental income (loss) on XYZ Limited Partnership – Cheryl 15,000Ordinary business income (loss) on ABC Limited Partnership- Alan (6,000)Automobile registration fees (Alan $700; Cheryl $500) 1,200Property taxes on personal residence 5,200B Anthem Blue Cross health insurance premiums(Cheryl is not covered by employer-provided medical insurance) 14,400Other medical expenses 2,470Tax preparation fees 1,750Charitable Contributions :Cash $9,000GE stock-FMV 12,000GE stock-Adjusted basis 7,000Reported (to Willimantic Police Department) theft of Cheryl’sjewelry from her home. Purchased ten years ago at acost of $10,300; appraised value was $9,700. Insurancereimbursement was $2,000. ?Ian completed first semester at Metropolitan State College.Tuition, books and fees (SS# 223-22-1234) $4,630Alan’s stock trades yielded:Date purchasedDate SoldCostSoldLT- 500 sh Chipotle 3/16/09 4/13/12 $8,600 $3,700LT- 200 sh Mattel 8/22/11 8/23/12 2,300 5,500ST- 100 sh United Airlines 3/18/11 2/5/12 2,000 1,000ST- 400 sh Apple 10/12/12 12/30/12 12,500 20,300Required:Complete Alan and Cheryl Hoover’s federal tax return(Form 1040 only) for 2012. Use Form 1040, SchedulesA,B,C,D, E, Forms 2106, 4562, 6251, 8828 and any other appropriateschedule(s) and form(s) you may need. Make realisticassumptions about any missing data. Do only the federal tax return.DO NOT DO THE STATE RETURN!