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INDIVIDUAL TAX RETURN PROBLEM 4
Required:
Use the following information to complete Phillip and Claire Dunphy’s 2011 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.
Facts:
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 11/5/1965 and his Social Security number is 321-44-5766.Claire’s birthday is 5/12/1968 and her Social Security number is 567-77-1258.Haley’s birthday is 11/6/1999 and his Social Security number is 621-18-7592.Alex’s birthday is 2/1/2001 and her Social Security number is 621-92-8751.Luke’s birthday is 12/12/2005 and his Social Security number is 621-99-9926.The Dunphys do not have any foreign bank accounts or trusts. 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.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.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 $730,000. Phillip uses the cash method of accounting for his business. Phillip’s business expenses are as follows:Advertising$ 5,000Professional dues800Professional journals200Employee wages48,000Insurance on office contents1,120Accounting services2,100Miscellaneous office expense500Utilities and telephone3,360Payroll taxes3,600DepreciationTo be calculatedOn 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.Page C-7
Fo
rm 10
40
Dep
a
rtment of the Treasury—Internal Revenue Servi
c
e
OMB No. 1
54
5-00
74
(99)
IRS Use Only—Do not write or staple in this space.
U.S. Individual
Income
Tax Return
2012
For the year Jan. 1–Dec. 31, 2012, or other tax year beginning , 2012, ending ,
20
See separate instructions.
Your first name an
d
initial Last name Your social security number
If
a
joint return, spouse’s first name and initial Last name Spouse’s social security number
▲
Make sure the SSN(s) above
and on line
6
c
are correct.
Home address (number and street). If you have a P.O. box, see instructions. Apt. no.
City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below
(see instructions)
.
Foreign country name Foreign province/state/county Foreign postal code
Presidential Election Campaign
Check here if you, or your spouse if filing
jointly, want $
3
to go to this fund. Checking
a box below will not change your tax or
refund. You Spouse
Filing Status
Check only one
box.
1
Single
2
Married filing jointly (even if only one had income)
3 Married filing separately. Enter spouse’s SSN above
and full name here.
▶
4
Head of household (with qualifying person). (See instructions.) If
the qualifying person is a child but not your dependent, enter this
child’s name here. ▶
5
Qualifying widow(er) with dependent child
Exemptions
6a Yourself. If someone can claim you as a dependent, do not check box 6a . . . . .
b
Spouse . . . . . . . . . . . . . . . . . . . . . . . .
}
c Dependents:
(1) First name Last name
(2) Dependent’s
social security number
(3) Dependent’s
relationship to you
(4) ✓ if child under age 1
7
qualifying for child tax credit
(see instructions)
If more than four
dependents, see
instructions and
check here ▶
d Total number of exemptions claimed . . . . . . . . . . . . . . . . .
Boxes checked
on 6a and 6b
No. of children
on 6c who:
• lived with you
• did not live with
you due to divorce
or separation
(see instructions)
Dependents on 6c
not entered above
Add numbers on
lines above ▶
Income
Attach
Form
(s)
W-2 here. Also
attach Forms
W-2G and
1099-R if tax
was withheld.
If you did not
get a W-2,
see instructions.
Enclose, but do
not attach, any
payment. Also,
please use
Form 1040-V.
7 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . 7
8
a Taxable interest. Attach Schedule B if required . . . . . . . . . . . .
8a
b Tax-exempt interest. Do not include on line 8a . . .
8b
9
a Ordinary dividends. Attach Schedule B if required . . . . . . . . . . .
9a
b Qualified dividends . . . . . . . . . . .
9b
10
Taxable refunds, credits, or offsets of state and local income taxes . . . . . . 10
11
Alimony received . . . . . . . . . . . . . . . . . . . . . 11
12
Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . 12
13
Capital gain or (loss). Attach Schedule D if required. If not required, check here ▶ 13
14
Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 14
15
a IRA distributions .
15a
b Taxable amount . . .
15b
16
a Pensions and annuities
16a
b Taxable amount . . .
16b
17
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17
18
Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . 18
19
Unemployment compensation . . . . . . . . . . . . . . . . . 19
20 a Social security benefits
20a
b Taxable amount . . .
20b
21
Other income. List type and amount
21
22
Combine the amounts in the far right column for lines 7 through 21. This is your total income ▶ 22
Adjusted
Gross
Income
23
Educator expenses . . . . . . . . . . 23
24
Certain business expenses of reservists, performing artists, and
fee-basis government officials. Attach Form 2106 or 2106-EZ 24
25
Health savings account deduction. Attach Form 8889 . 25
26
Moving expenses. Attach Form
39
03 . . . . . . 26
27
Deductible part of self-employment tax. Attach Schedule SE . 27
28
Self-employed SEP, SIMPLE, and qualified plans . . 28
29
Self-employed health insurance deduction . . . . 29
30
Penalty on early withdrawal of savings . . . . . . 30
31 a Alimony paid b Recipient’s SSN ▶
31a
32
IRA deduction . . . . . . . . . . . . . 32
33
Student loan interest deduction . . . . . . . . 33
34
Tuition and fees. Attach Form 8917 . . . . . . . 34
35
Domestic production activities deduction. Attach Form 8903 35
36
Add lines 23 through 35 . . . . . . . . . . . . . . . . . . . 36
37
Subtract line 36 from line 22. This is your adjusted gross income . . . . . ▶ 37
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 11320B
Form 1040 (2012)
Form 1040 (2012)
Page 2
Tax and
Credits
38
Amount from line 37 (adjusted gross income) . . . . . . . . . . . . . . 38
39a
Check
if:
{
You were born before January 2, 1948, Blind.
Spouse was born before January 2, 1948, Blind.
} Total boxes
checked ▶ 39a
b If your spouse itemizes on a separate return or you were a dual-status alien, check here ▶ 39b Standard
Deduction
for—
• People who
check any
box on line
39a or 39b or
who can be
claimed as a
dependent,
see
instructions.
• All others:
Single or
Married filing
separately,
$5,9
50
Married filing
jointly or
Qualifying
widow(er),
$11,900
Head of
household,
$8,
70
0
40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . 40
41
Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . . . 41
42
Exemptions. Multiply $3,800 by the number on line 6d . . . . . . . . . . . . 42
43
Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . 43
44
Tax (see instructions). Check if any from: a Form(s) 8814 b Form 49
72
c 9
62
election 44
45
Alternative minimum tax (see instructions). Attach Form 62
51
. . . . . . . . . 45
46
Add lines 44 and 45 . . . . . . . . . . . . . . . . . . . . . ▶ 46
47
Foreign tax credit. Attach Form 1116 if required . . . . 47
48
Credit for child and dependent care expenses. Attach Form 2441
48
49
Education credits from Form 88
63
, line 19 . . . . . 49
50
Retirement savings contributions credit. Attach Form 8880
50
51 Child tax credit. Attach Schedule 8812, if required . . . 51
52
Residential energy credits. Attach Form 5
69
5 . . . . 52
53
Other credits from Form: a 3800 b 8801 c 53
54
Add lines 47 through 53. These are your total credits . . . . . . . . . . . . 54
55
Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- . . . . . . ▶ 55
Other
Taxes
56
Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . 56
57
Unreported social security and Medicare tax from Form:
a 4137 b 8919 . . 57
58
Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . 58
59
a
59a
b
59b
Household employment taxes from Schedule H . . . . . . . . . . . . . .
First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . .
60
Other taxes. Enter code(s) from instructions 60
61
Add lines 55 through 60. This is your total tax . . . . . . . . . . . . . ▶ 61
Payments
62 Federal income tax withheld from Forms W-2 and 1099 . . 62
63
2012 estimated tax payments and amount applied from 2011 return
63
If you have a
qualifying
child, attach
Schedule EIC.
64
a Earned income credit (EIC) . . . . . . . . . .
64a
b Nontaxable combat pay election
64b
65
Additional child tax credit. Attach Schedule 8812 . . . . . 65
66
American opportunity credit from Form 8863, line 8 . . . . 66
67
Reserved . . . . . . . . . . . . . . . . 67
68
Amount paid with request for extension to file . . . . . 68
69 Excess social security and tier 1 RRTA tax withheld . . . . 69
70 Credit for federal tax on fuels. Attach Form 4136 . . . . 70
71
Credits from Form: a 2439 b Reserved c 8801 d 8885 71
72 Add lines 62, 63, 64a, and 65 through 71. These are your total payments . . . . . ▶ 72
Refund
Direct deposit?
See
instructions.
73
If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid 73
74a
Amount of line 73 you want refunded to you. If Form 8888 is attached, check here . ▶ 74a
▶
▶
b
Routing number
▶ c Type: Checking Savings
d
Account number
75
Amount of line 73 you want applied to your 2013 estimated tax ▶ 75
Amount
You Owe
76
Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions ▶ 76
77
Estimated tax penalty (see instructions) . . . . . . . 77
Third Party
Designee
Do you want to allow another person to discuss this return with the IRS (see instructions)?
Yes. Complete below. No
Designee’s
name ▶
Phone
no. ▶
Personal identification
number (PIN) ▶
Sign
Here
Joint return? See
instructions.
Keep a copy for
your records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief,
they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature
Date
Your occupation Daytime phone number
Spouse’s signature. If a joint return, both must sign.
▲
Date Spouse’s occupation If the IRS sent you an Identity Protection
PIN, enter it
here (see inst.)
Paid
Preparer
Use Only
Print/Type preparer’s name
Preparer’s signature
Date
Check if
self-employed
PTIN
Firm’s name ▶
Firm’s address ▶
Firm’s EIN ▶
Phone no.
Form 1040 (2012)
Version A, Cycle 8
Internal Use Only
DRAFT AS OF
January 5, 2013
Version A, Cycle 8
Internal Use Only
DRAFT AS OF
January 5, 2013
2012 Form 1040
SE:W:CAR:MP
U.S. Individual Income Tax Return
Form
1040
Department of the Treasury—Internal Revenue Service
OMB No. 1545-0074
O M B number 1545-0074. For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
(99)
IRS Use Only—Do not write or staple in this space.
U.S. Individual Income Tax Return
2012
2012. Catalog Number 11320B.
See separate instructions.
▲
Make sure the SSN(s) above and on line 6c are correct.
Presidential Election Campaign
Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund.
Filing Status
Check only one box.
1
Single
2
Married filing jointly (even if only one had income)
3
Married filing separately. Enter spouse’s SSN above and full name here. ▶
4
Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child’s name here. ▶
5
Qualifying widow(er) with dependent child
Exemptions
6
a
Yourself. If someone can claim you as a dependent, do not check box 6a
b
Spouse
}
c
Dependents:
(1) First name Last name
(2) Dependent’s
social security number
(3) Dependent’s relationship to you
(4) ✓ if child under age 17 qualifying for child tax credit
(see instructions)
(4) Check if qualifying child for child tax credit (see page 17).
If more than four dependents, see instructions and check here ▶
d
Total number of exemptions claimed
Boxes checked on 6a and 6b
No. of children on 6c who:
• lived with you
• did not live with you due to divorce or separation
(see instructions)
Dependents on 6c not entered above
Add numbers on lines above ▶
Income
Attach Form(s) W-2 here. Also attach Forms W-2G and
1099-R if tax was withheld.
If you did not
get a W-2,
see instructions.
Enclose, but do not attach, any payment. Also, please use
Form 1040-V.
7
Wages, salaries, tips, etc. Attach Form(s) W-2
7
8
a
Taxable interest. Attach Schedule B if required
8a
b
Tax-exempt interest. Do not include on line 8a
8b
9
a
Ordinary dividends. Attach Schedule B if required
9a
b
Qualified dividends
9b
10
Taxable refunds, credits, or offsets of state and local income taxes
10
11
Alimony received
11
12
Business income or (loss). Attach Schedule C or C-EZ
12
13
Capital gain or (loss). Attach Schedule D if required. If not required, check here ▶
13
14
Other gains or (losses). Attach Form 4797
14
15
a
IRA distributions
15a
b Taxable amount
15b
16
a
Pensions and annuities
16a
b Taxable amount
16b
17
Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E
17
18
Farm income or (loss). Attach Schedule F
18
19
Unemployment compensation
19
20
a
Social security benefits
20a
b Taxable amount
20b
21
Other income. List type and amount
21
22
Combine the amounts in the far right column for lines 7 through 21. This is your total income ▶
22
Adjusted Gross Income
23
Educator expenses
23
24
Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ
24
25
Health savings account deduction. Attach Form 8889
25
26
Moving expenses. Attach Form 3903
26
27
Deductible part of self-employment tax. Attach Schedule SE
27
28
Self-employed SEP, SIMPLE, and qualified plans
28
29
Self-employed health insurance deduction
29
30
Penalty on early withdrawal of savings
30
31
a
Alimony paid
b Recipient’s SSN ▶
31a
32
IRA deduction
32
33
Student loan interest deduction
33
34
Tuition and fees. Attach Form 8917
34
35
Domestic production activities deduction. Attach Form 8903
35
36
Add lines 23 through 35
36
37
Subtract line 36 from line 22. This is your adjusted gross income ▶
37
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 11320B
Form 1040 (2012)
Form 1040 (2012)
Page 2
Tax and Credits
38
Amount from line 37 (adjusted gross income)
38
39
a
Check if:
{
}
Total boxes checked ▶
39a
b
If your spouse itemizes on a separate return or you were a dual-status alien, check here ▶
Standard Deduction for—
• People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions.
• All others:
Single or Married filing separately, $5,950
Married filing jointly or Qualifying widow(er), $11,900
Head of household, $8,700
40
Itemized deductions (from Schedule A) or your standard deduction (see left margin)
40
41
Subtract line 40 from line 38
41
42
Exemptions. Multiply $3,800 by the number on line 6d
42
43
Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0-
43
44
Tax (see instructions). Check if any from:
a
b
c
44
45
Alternative minimum tax (see instructions). Attach Form 6251
45
46
Add lines 44 and 45 ▶
46
47
Foreign tax credit. Attach Form 1116 if required
47
48
Credit for child and dependent care expenses. Attach Form 2441
48
49
Education credits from Form 8863, line 19
49
50
Retirement savings contributions credit. Attach Form 8880
50
51
Child tax credit. Attach Schedule 8812, if required
51
52
Residential energy credits. Attach Form 5695
52
53
Other credits from Form:
a
b
c
53
54
Add lines 47 through 53. These are your total credits
54
55
Subtract line 54 from line 46. If line 54 is more than line 46, enter -0- ▶
55
Other Taxes
56
Self-employment tax. Attach Schedule SE
56
57
Unreported social security and Medicare tax from Form:
a
b
57
58
Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required
58
59
a
59a
b
59b
Household employment taxes from Schedule H
First-time homebuyer credit repayment. Attach Form 5405 if required
60
Other taxes. Enter code(s) from instructions
60
61
Add lines 55 through 60. This is your total tax ▶
61
Payments
62
Federal income tax withheld from Forms W-2 and 1099
62
63
2012 estimated tax payments and amount applied from 2011 return
63
If you have a qualifying child, attach Schedule EIC.
64
a
Earned income credit (EIC)
64a
b
Nontaxable combat pay election
64b
65
Additional child tax credit. Attach Schedule 8812 .
65
66
American opportunity credit from Form 8863, line 8
66
67
Reserved
67
68
Amount paid with request for extension to file
68
69
Excess social security and tier 1 RRTA tax withheld
69
70
Credit for federal tax on fuels. Attach Form 4136
70
71
Credits from Form:
a
b
c
d
71
72
Add lines 62, 63, 64a, and 65 through 71. These are your total payments ▶
72
Refund
Direct deposit? See instructions.
73
If line 72 is more than line 61, subtract line 61 from line 72. This is the amount you overpaid
73
74
a
Amount of line 73 you want refunded to you. If Form 8888 is attached, check here ▶
74a
▶
▶
b
Routing number
▶ c Type:
d
Account number
75
Amount of line 73 you want applied to your 2013 estimated tax ▶
75
Amount You Owe
76
Amount you owe. Subtract line 72 from line 61. For details on how to pay, see instructions ▶
76
77
Estimated tax penalty (see instructions)
77
Third Party Designee
Do you want to allow another person to discuss this return with the IRS (see instructions)?
Designee’s name ▶
Phone
no. ▶
Personal identification number (PIN) ▶
Sign Here
Joint return? See instructions. Keep a copy for your records.
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Your signature
Date
Spouse’s signature. If a joint return, both must sign.
▲
Date
If the IRS sent you an Identity Protection PIN, enter it
here (see inst.)
Paid Preparer Use Only
Preparer’s signature
Date
Check if
self-employed
Form 1040 (2012)
p1-t1:
p1-t2:
p1-t3:
p1-t4: Phillips
p1-t5: Dumpy
p1-t11: 321445766
p1-t6: Claire
p1-t7: Dumpy
p1-t14: 567771258
p1-t8:
p1-t9:
p1-t10:
f1_011:
f1_012:
f1_013:
c1_02_0_:
c1_03:
c1_04: MJ
p1-t17:
p1-t18:
c1_05: 1
c1_06: 1
p1-t20: HaleyDum
p1-t21: 621187592
p1-t24: son
c1_07: 1
p1-t25: Alex Dumpy
p1-t26: 621928751
p1-t30: daughter
c1_08: 1
p1-t31: Luke Dumpy
p1-t32: 626219999
p1-t35: son
c1_09: 1
p1-t36:
p1-t37:
p1-t40:
c1_10:
c1_01_0_:
p1-t19: 2
p1-t42: 3
p1-t43:
p1-t44:
p1-t45: 5
p1-t46: 57,000
p1-t47:
p1-t48: 300
p1-t49:
p1-t50:
p1-t51:
p1-t52: 395
p1-53:
p1-t54:
p1-t55:
p1-t56:
p1-t57:
p1-t58:
p1-t59:
p1-t60: 665,320
p1-t61:
c1_11:
p1-t62: 104,304
p1-t63:
p1-t64:
p1-t65:
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p1-t67:
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p2-t1:
p2-t2:
c2_01:
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p2-t16:
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p2-t19:
p2-t20: 10800
p2-t21:
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c2_16:
c2_17:
p2-t43:
p2-t44:
p2-t45:
p2-t46:
p2-t47:
p2-t48:
p2-t49:
p2-t50:
p2-t53: 6,375
p2-t54:
p2-t55:
p2-t56:
p2-t57:
p2-t58:
p2-t59:
p2-t60:
p2-t61:
p2-t62:
p2-t63:
p2-t64:
p2-t65:
p2-t66:
p2-t67:
p2-t68:
p2-t69:
p2-t70:
c2_20:
c2_21:
c2_22:
c2_23:
p2-t71:
p2-t72:
p2-t73:
p2-t74:
p2-t75:
p2-t76:
c2_24:
p2-t77:
p2-t78:
f1_040_0_:
c2_25:
c2_26:
p2-t105:
p2-t106:
p2-t107:
p2-t108:
p2-t109:
p2-t110:
c2_27:
p2-t111:
p2-t113:
p2-t114:
p2-t119:
p2-t121:
p2-t122:
f2_130:
p2-t130:
p2-t123:
p2-t125:
p2-t124:
p2-t127:
p2-t129:
