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TaxReturn Project
ACCT407 Fall 2013
(Due at 10:45am Dec. 2nd)
Required:
Use the following information to complete Phillip and Claire Dunphy’s 2013 federal income
tax return. If information is missing, use reasonable assumptions to fill in the gaps. Ignore
the alternative minimum tax for this problem.
Any required forms, schedules, and instructions can be found at the IRS Web site
(www.irs.gov). The instructions can be helpful in completing the forms.
You need to staple and hand in the forms in the proper order with a printed cover sheet (8%
of the grade will be based on the document organization and clearance). The forms will
include 1040, Schedule C, D, SE, 4562, 8949 (do not need to prepare form 4797)
This project is time consuming. Please do not wait until the last minutes. Your solutions
must be the result of your own work, not a copy of another student’s solutions.
The number of Form 1040 line 14 is $81,687. The numbers on Schedule D lines 11 and 19
are $197,882 and $126,033 respectively.
Check numbers:
Schedule C Line 31: $69,749
Facts:
1. Phillip and Claire are married and file a joint return. Phillip is self-employed as a real estate
agent, and Claire is a flight attendant. Phillip and Claire have three dependent children. All
three children live at home with Phillip and Claire for the entire year.
The Dunphys provide you with the following additional information:
The Dunphys do not want to contribute to the presidential election campaign.
The Dunphys live at 3701 Brighton Avenue, Los Angeles, CA 90018.
Phillip’s birthday is 11/5/1966 and his Social Security number is 321-44-5766.
Claire’s birthday is 5/12/1969 and her Social Security number is 567-77-1258.
Haley’s birthday is 11/6/2000 and her Social Security number is 621-18-7592.
Alex’s birthday is 2/1/2002 and her Social Security number is 621-92-8751.
Luke’s birthday is 12/12/2006 and his Social Security number is 621-99-9926.
The Dunphys do not have any foreign bank accounts or trusts.
2. Claire is a flight attendant for Western American Airlines (WAA), where she earned
$57,000 in salary. WAA withheld federal income tax of $6,375, state income tax of $1,800,
Los Angeles city income tax of $675, Social Security tax of $3,600, and Medicare tax of
$825.
3. Phillip and Claire received $300 of interest from State Savings Bank on a joint account.
They also received a qualified dividend of $395 on jointly owned stock in Xila Corporation.
http://www.irs.gov/
4. Phillip’s real estate business is named “Phillip Dunphy Realty.” His business is located at
645 Grove Street, Los Angeles, CA 90018, and his employer identification number is 93-
3488888. Phillip’s gross receipts during the year were $730,000. Phillip uses the cash
method of accounting for his business. Phillip’s business expenses are as
follows:
On March 20, Phillip moved his business out of the old offices at 1103 Allium Lane into a
newly constructed and equipped office on Grove Street. Phillip sold the old office building
and all its furnishings. Phillip’s expenditures for the new office building are as follows:
Phillip computes his cost recovery allowance using MACRS. He would like to use the §179
immediate expensing, but he has elected to not claim any bonus depreciation. Phillip has
never claimed §179 or bonus depreciation before. The assets Phillip sold on March 20 are as
follows:
Phillip has never sold any assets relating to his business before this transaction.
5. The Dunphys sold 60 shares of Fizbo Corporation common stock on September 3, for $65 a
share (minus a $50 total commission). The Dunphys purchased the stock on November 8,
2012, for $90 a share. They also sold a painting for $13,000 on March 1. Claire purchased
the painting for $20,050 on September 1, 2005, as an investment.
6. The Dunphys filed their 2012 federal, state, and local returns on April 13, 2013. They paid
the following additional 2012 taxes with their returns: federal income taxes of $630, state
income taxes of $250, and city income taxes of $75.
7. The Dunphys made timely estimated federal income tax payments of $16,000 each quarter
during 2013. They also made estimated state income tax payments of $1,000 each quarter
and estimated city income tax payments of $300 each quarter. The Dunphys made all
fourth-quarter payments on December 31, 2013. They would like to receive a refund for any
overpayments.
