Question

(A) Prepare an individual income tax return.George Large (SSN 000-11-1111) and his wife Marge Large (SSN 000-22-2222) live at 2000 Lakeview Drive, Cleveland, OH 49001 and want you to prepare their 2017 income tax return based on the information below: George Large worked as a salesman for Toyboat, Inc. He received a salary of $80,000 ($8,500 of federal income taxes withheld and $1,800 of state income taxes withheld) plus an expense reimbursement from Toyboat of $5,000 to cover his employee business expenses. George must make an adequate accounting to his employer and return any excess reimbursement, none of the reimbursement was related to the meals and entertainment. Additionally, Toyboat provides George with medical insurance worth $7,200 per year. George drove his car a total of 24,000 miles during the year, and he placed the car in service on June 1, 2015. His log indicates that 18,000 miles were for sales calls to customers at the customers' offices and the remainder was personal mileage. George uses the standard mileage rate method. George is a college basketball fan. He purchased two season tickets for a total of $4,000. He takes a customer to every game, and they discuss some business before, during, and after the games. George also takes clients to business lunches. His log indicates that he spent $1,500 on these business meals. George also took a five-day trip to the Toyboat headquarters in Musty, Ohio. He was so well-prepared that he finished his business in three days, so he spent the other two days sightseeing. He had the following expenses during each of the five days of his trip: Airfare $200 Lodging $85/day Meals $50/day Taxicabs $20/day Marge Large is self-employed. She repairs rubber toy boats in the basement of their home. The total square footage of the Larges' home, including the basement, is 3,000 square feet. The portion of the basement used in Marge's business is 750 square feet. The business code is 811490. She had the following income and expenses: Income from rubber toy boat repairs $15,000 Cost of supplies 5,000 Contract labor 3,500 Telephone (business) 500 The Larges use the simplified method to figure their deduction for Marge's business use of their home. The Larges incurred the following total other expenses: Real estate taxes 2,500 Mortgage interest 4,500 Cash charitable contributions 3,500 Prepare Form 1040, Schedules A, C, and SE for Form 1040, and Form 2106 for the 2017 year. (Assume no depreciation for this problem and that no estimated taxes were paid by the Larges.)(B) In addition to the preparation of the individual income tax return for this topic, write a 300-500-word paper in which you address the following ethical issues associated with tax preparation:1. Discuss the legal and ethical aspects of accurately reporting income on tax returns using Circular 230 as published by the Department of Treasury (located in Topic Materials). Discuss one item in Section B on Duties and Restrictions and the consequences to tax preparers if they fail to adhere to the guidelines as provided by the Department of Treasury.2. Compare and contrast the concepts of "tax avoidance" and "tax evasion".3. (Optional) You are welcome to add a discussion about how ethics in taxation can correlate to the Christian worldview. In other words, what guidance from a Biblical perspective could be applied to the preparation of tax returns for clients?Prepare this assignment according to the APA guidelinesApply basic legal, tax, and ethical concepts to issues in financial reporting.

Answer 1

Step-by-step explanation:

prepare from 1040 to disclose Income and respective Tax

FORM 1040

Amount ($)

Salary Received 80,000

Business Income- Wn1) 2,789

Total Income 82,789

Less - Itemized wise Deduction-Wn2 21,405

Total Income 61,384

Standard deduction 11,900

Total Taxable Income 49,484

tax

From 0-$17400 10% 1,740

From $17400-$70700 15% 4,813

Total Tax Liability 6,553

Schedule A

wn2

Real Estate Tax 2,500

Interest on Mortgage 4,500

Gifts to Charity 3,500

Unreimbursed Job Expeses(FORM 2106) 10,905

Total Itemized wise Deduction 21,405

wn1

Income from rubbery toy boat 15,000

Less cost

Cost of suppies 5000

Business phone call 3500

Cost of suppies 500

Total 9000

Total Business Income 6,000

Less- FORM 8829 Expeses 3211

Business Income- 2,789

FORM 2106

Car expenses 9990

Travelling Expense 665

Meal Expenses 5500

Total 10655 5500

Less Reimbursement 5000

Total 10655 500

Expenses Allowed 10655 250

Total 10905

FORM 8829

25% is used for Business

Income from buisness 6000

Mortgage Interest' -1125

Reat estate tax -625

Utility Bills -500

Depreciation -961

Total Business Income 2789

Calculate depreciation

Lesser of fair market value or adjusted cost 1,70,000

Less - value of Land -20,000

Total 1,50,000

Basis of building 37,500

rate of depreciation 2.56%

960