Tax Return Project: Health institutions

Tax Return Project

ACCT407 Spring 2014

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?Use the following information to complete Phillip and Claire Dunphy’s2013federal 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 ( 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 and 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.


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, New Orleans, LA 70112.

?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.

Phillip and Claire provided over half of the support of Claire’s mother, who currently lives in a nursing home in Houma, LA.

2. Claire received a Form W-2 from her employer reporting the following information for 2013:

Wages, tips, other compensation: $57,000

Federal income tax withheld 6,375

Social Security tax 3,600

Medicare tax 825

State income taxes withheld 1,800

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.

4. Phillip’s real estate business is named “Phillip Dunphy Realty.” His business is located at 645 Grove Street, New Orleans, LA 70112, 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. Phillip and Claire’s personal expenses for the year are as follows:

Credit card debt $ 800

Qualified medical bills 4,500

Real property taxes 3,300

Interest paid for

Home mortgage 9,500

Credit card interest 1,000

Personal car loan 1,720

Cash contributions to First Baptist church 4.500

State income taxes paid during 2013 2,100*

Claire’s unreimbursed employee expense 450**

Tax return preparation fee 560***

*Does not include amounts withheld fromClaire’s salary.

**Does not include any costs for meals or entertainment.

***$200 is related to preparation to Schedule C

7. Phillip made an $11,500 deductible contribution to her Keogh plan on December 15, 2013.

8. 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.

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