ACCT 542 Cal State Northridge Audit Plan Paper

  

Description

Form
1040
Department of the Treasury
‘ Internal Revenue Service
(99)
U.S. Individual Income Tax Return
For the year Jan 1 – Dec 31, 2014, or other tax year beginning
2014
, 2014, ending
Your first name and initial
OMB No. 1545-0074 IRS Use Only
, 20
‘ Do not write or staple in this space.
See separate instructions.
Last name
Your social security number
JOSEPH D PLUMMER
133-50-5453
If a joint return, spouse’s first name and initial
Last name
Spouse’s social security number
Home address (number and street). If you have a P.O. box, see instructions.
Apartment no.
3501 CARIBEH DRIVE
City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).
ENCINO, CA 91436
Foreign country name
Foreign province/state/county
Foreign postal code
J
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.
You
Filing Status
Check only
one box.
Exemptions
1
2
3
Single
4
Married filing jointly (even if only one had income)
Married filing separately. Enter spouse’s SSN above & full
name here. . G
5
Spouse
X 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. .. G
Qualifying widow(er) with dependent child
6a X Yourself. If someone can claim you as a dependent, do not check box 6a. . . . . . . . . . .
Boxes checked
on 6a and 6b. . .
No. of children
on 6c who:
b
Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) b if
(2) Dependent’s
(3) Dependent’s
c Dependents:
child under ? lived
social security
relationship
age 17
with you. . . . . .
number
to you
qualifying for
child tax cr ? did not
Last
name
(1) First name
(see instrs) live with you
If more than four
dependents, see
instructions and
check here. . . G
JOSEPH PLUMMER II
JOSEPHINE PLUMMER
1
2
due to divorce
or separation
(see instrs). . . .
Dependents
on 6c not
entered above. .
Add numbers
on lines
claimed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . above. . . . . . G
542-12-3232 Son
546-31-3327 Daughter
X
X
d Total number of exemptions
7 Wages, salaries, tips, etc. Attach Form(s) W-2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Income
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
Attach Form(s)
b Qualified dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9b
W-2 here. Also
attach Forms
10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . . . . . . . . . . . . . . 10
W-2G and 1099-R
11 Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
if tax was withheld.
12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
If you did not
13 Capital gain or (loss). Att Sch D if reqd. If not reqd, ck here . . . . . . . . . . . . . . . . . . . . . . . . G
13
get a W-2,
14 Other gains or (losses). Attach Form 4797. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
see instructions.
15 a IRA distributions. . . . . . . . . . . . 15 a
b Taxable amount. . . . . . . . . . . . . 15 b
16 a Pensions and annuities . . . . . 16 a
b Taxable amount. . . . . . . . . . . . . 16 b
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 . . . . . . . . . . 20 a
b Taxable amount. . . . . . . . . . . . . 20 b
21 Other income
21
22 Combine the amounts in the far right column for lines 7 through 21. This is your total income. . . . . . . . . . . . . G 22
23 Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Adjusted
24 Certain business expenses of reservists, performing artists, and fee-basis
government officials. Attach Form 2106 or 2106-EZ . . . . . . . . . . . . . . . . . . . . 24
Gross
25 Health savings account deduction. Attach Form 8889. . . . . . . . 25
Income
26 Moving expenses. Attach Form 3903 . . . . . . . . . . . . . . . . . . . . . . . 26
27 Deductible part of self-employment tax. Attach Schedule SE. . . . . . . . . . . . . . 27
8,604.
28 Self-employed SEP, SIMPLE, and qualified plans. . . . . . . . . . . 28
29 Self-employed health insurance deduction. . . . . . . . . . . . . . . . . . 29
30 Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . . . 30
31,203.
31 a Alimony paid b Recipient’s SSN . . . . G 121-43-4341
31 a
240,000.
32 IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
33 Student loan interest deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
34 Tuition and fees. Attach Form 8917 . . . . . . . . . . . . . . . . . . . . . . . . 34
10,219.
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. . . . . . . . . . . . . . . . . . . . . G 37
BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.
FDIA0112L 12/29/14
3
750,000.
114,217.
303.
191,095.
312,032.
1,367,647.
290,026.
1,077,621.
Form 1040 (2014)
Form 1040 (2014)
Tax and
Credits
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,
$6,200
Married filing
jointly or
Qualifying
widow(er),
$12,400
Head of
household,
$9,100
Other
Taxes
Payments
If you have a
qualifying
child, attach
Schedule EIC.
Refund
Direct deposit?
See instructions.
Amount
You Owe
Third Party
Designee
Sign
Here
Joint return?
See instructions.
Keep a copy
for your records.
JOSEPH D PLUMMER
38 Amount from line 37 (adjusted gross income). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39 a Check
You were born before January 2, 1950,
Blind.
Total boxes
Spouse was born before January 2, 1950,
if:
Blind.
checked G 39 a
b If your spouse itemizes on a separate return or you were a dual-status alien, check here . . . . . . . . . G 39 b
Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . . . . . . . . . . . . . . . . . . .
Subtract line 40 from line 38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exemptions. If line 38 is $152,525 or less, multiply $3,950 by the number on line 6d. Otherwise, see instrs. . . . . .
Taxable income. Subtract line 42 from line 41.
If line 42 is more than line 41, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44 Tax (see instrs). Check if any from:
a
c
Form(s) 8814
b
Form 4972 . . . . . . . . . . . . . . . . . . . . . . . . . . .
45 Alternative minimum tax (see instructions). Attach Form 6251. . . . . . . . . . . . . . . . . . . . . . . . . .
46 Excess advance premium tax credit repayment. Attach Form 8962. . . . . . . . . . . . . . . . . . . . . .
47 Add lines 44, 45 and 46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
48 Foreign tax credit. Attach Form 1116 if required. . . . . . . . . . . . .
48
49 Credit for child and dependent care expenses. Attach Form 2441 . . . . . . . . . .
49
50 Education credits from Form 8863, line 19. . . . . . . . . . . . . . . . . .
50
51 Retirement savings contributions credit. Attach Form 8880. . .
51
52 Child tax credit. Attach Schedule 8812, if required . . . . . . . . . .
52
53 Residential energy credits. Attach Form 5695. . . . . . . . . . . . . . .
53
40
41
42
43
54 Other crs from Form: a
54
3800 b
8801 c
55 Add lines 48 through 54. These are your total credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56 Subtract line 55 from line 47. If line 55 is more than line 47, enter -0-. . . . . . . . . . . . . . . . . . G
57 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58 Unreported social security and Medicare tax from Form: a
8919. . . . . . . . . . . . . . . . . . . . . . .
4137 b
59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required. . . . . . . . . . . . . . . . . . .
60 a Household employment taxes from Schedule H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . . . . . . . . . . . .
X ………..
61 Health care: individual responsibility (see instructions) Full-year coverage
62 Taxes from: a X Form 8959 b
Form 8960 c
Instrs; enter code(s)
63 Add lines 56-62. This is your total tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
64 Federal income tax withheld from Forms W-2 and 1099 . . . . .
64
236,250.
65 2014 estimated tax payments and amount applied from 2013 return. . . . . . . .
65
66 a Earned income credit (EIC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66 a
b Nontaxable combat pay election . . . . . G 66 b
67 Additional child tax credit. Attach Schedule 8812. . . . . . . . . . . .
67
68 American opportunity credit from Form 8863, line 8. . . . . . . . .
68
69 Net premium tax credit. Attach Form 8962. . . . . . . . . . . . . . . . . .
69
70 Amount paid with request for extension to file . . . . . . . . . . . . . .
70
71 Excess social security and tier 1 RRTA tax withheld. . . . . . . . .
71
72 Credit for federal tax on fuels. Attach Form 4136. . . . . . . . . . . .
72
73 Credits from Form: a
73
Reserved c
Reserved d
2439 b
74 Add lns 64, 65, 66a, & 67-73. These are your total pmts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid . . . . . . . . . . . . . . .
76 a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here. . G
G b Routing number . . . . . . . . XXXXXXXXXX
G c Type:
Checking
Savings
G d Account number. . . . . . . . XXXXXXXXXXXXXXXXXXXXXXXX
77 Amount of line 75 you want applied to your 2015 estimated tax. . . . . . . . G 77
78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions. . . . . . . . . . . . . . . G
79 Estimated tax penalty (see instructions). . . . . . . . . . . . . . . . . . . .
79
Do you want to allow another person to discuss this return with the IRS (see instructions)?. . . . . . . . . . .
Designee’s
name
FDIA0112L
12/29/14
Phone
no.
G
40
41
42
575,325.
502,296.
0.
43
502,296.
44
45
46
47
151,182.
240.
151,422.
55
56
57
58
59
60 a
60 b
61
62
63
151,422.
17,208.
6,538.
175,168.
236,250.
61,082.
61,082.
74
75
76 a
78
X No
Yes. Complete below.
Personal identification
number (PIN)
G
G
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
A Spouse’s signature. If a joint return, both must sign.
Print/Type preparer’s name
Paid
Preparer
Use Only
Page 2
133-50-5453
38
1,077,621.
SALESMAN
Date
Preparer’s signature
Self-Prepared
Firm’s name
If the IRS sent you an Identity Protection PIN, enter
it here (see instrs)
Spouse’s occupation
Date
Check
if
PTIN
self-employed
G
Firm’s address G
Firm’s EIN G
Phone no.
Form 1040 (2014)
SCHEDULE A
OMB No. 1545-0074
Itemized Deductions
(Form 1040)
Department of the Treasury
Internal Revenue Service
(99)
2014
G Information about Schedule A and its separate instructions is at www.irs.gov/schedulea.
G Attach to Form 1040.
Attachment
Sequence No.
Name(s) shown on Form 1040
Your social security number
JOSEPH D PLUMMER
133-50-5453
Medical
and
Dental
Expenses
Taxes You
Paid
Interest
You Paid
Note.
Your mortgage
interest
deduction may
be limited (see
instructions).
Gifts to
Charity
If you made a
gift and got a
benefit for it,
see instructions.
1
2
3
07
Caution. Do not include expenses reimbursed or paid by others.
Medical and dental expenses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Enter amount from Form 1040, line 38. . . . . .
2
Multiply line 2 by 10% (.10). But if either you or your spouse was born before
3
January 2, 1950, multiply line 2 by 7.5% (.075) instead
4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . .
5 State and local (check only one box):
a X Income taxes, or
5
50,250.
…………………………
b
General sales taxes
6 Real estate taxes (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . .
6
25,221.
7 Personal property taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8 Other taxes. List type and amount G
8
9 Add lines 5 through 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Home mtg interest and points reported to you on Form 1098. . . . . . . . . . . . . . . .
11 Home mortgage interest not reported to you on Form 1098. If paid to the person
from whom you bought the home, see instructions and show that person’s name,
identifying number, and address G
10
4
0.
9
75,471.
93,212.
11
28,443.
12
12 Points not reported to you on Form 1098. See instrs for spcl rules. . . . . . . . . . . .
13 Mortgage insurance premiums (see instructions) . . . . . . . . . . . . . .
13
14 Investment interest. Attach Form 4952 if required.
14
(See instrs.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 Add lines 10 through 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Gifts by cash or check. If you made any gift of $250 or
more, see instrs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121,655.
16
17 Other than by cash or check. If any gift of $250 or
more, see instructions. You must attach Form 8283 if
over $500. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Carryover from prior year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
19
0.
20 Casualty or theft loss(es). Attach Form 4684. (See instructions.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Job Expenses 21 Unreimbursed employee expenses ‘ job travel, union dues,
job education, etc. Attach Form 2106 or 2106-EZ if
and Certain
Miscellaneous
required. (See instructions.) G
Deductions
21
22 Tax preparation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
500.
23 Other expenses ‘ investment, safe deposit box, etc. List
type and amount G
402,138.
19 Add lines 16 through 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Casualty and
Theft Losses
Other
Miscellaneous
Deductions
Total
Itemized
Deductions
24
25
26
27
28
23
24
Add lines 21 through 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
500.
1,077,621.
Enter amount from Form 1040, line 38. . . . . 25
26
Multiply line 25 by 2% (.02) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,552.
Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . . . . . . . . . . . . . . . . . . . . . . 27
Other ‘ from list in instructions. List type and amount G
28
29 Is Form 1040, line 38, over $152,525?
Reduction
No. Your deduction is not limited. Add the amounts in the far right column
-23,939.
for lines 4 through 28. Also, enter this amount on Form 1040, line 40.
29
…………………..
Yes.
Your
deduction
may
be
limited.
See
the
Itemized
Deductions
Worksheet
X in the instructions to figure the amount to enter.
30 If you elect to itemize deductions even though they are less than your standard
deduction, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
BAA For Paperwork Reduction Act Notice, see Form 1040 instructions.
FDIA0301L 12/29/14
0.
0.
575,325.
Schedule A (Form 1040) 2014
SCHEDULE B
(Form 1040A or 1040)
Department of the Treasury
Internal Revenue Service (99)
2014
G Attach to Form 1040A or 1040.
G Information about Schedule B and its instructions is at www.irs.gov/scheduleb.
Name(s) shown on return
Attachment
Sequence No.
1
133-50-5453
Amount
List name of payer. If any interest is from a seller-financed mortgage and the buyer used
the property as a personal residence, see the instructions and list this interest first. Also,
show that buyer’s social security number and address G
BANK OF AMERICA
CEDAR BANK
COMMERCE VALLEY BANK
WELLS FARGO
(See
instructions for
Form 1040A, or
Form 1040,
line 8a.)
Note. If you
received a Form
1099-INT, Form
1099-OID, or
substitute statement
from a brokerage
firm, list the firm’s
name as the payer
and enter the total
interest shown on
that form.
5.
81,221.
32,932.
59.
1
2
3
Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach
Form 8815 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Subtract line 3 from line 2. Enter the result here and on Form 1040A, or Form 1040, line 8a. . . . . . . . . . . . . . . . . . G
Note. If line 4 is over $1,500, you must complete Part III.
Part II
08
Your social security number
JOSEPH D PLUMMER
Part I
Interest
OMB No. 1545-0074
Interest and Ordinary Dividends
5
2
3
4
114,217.
114,217.
Amount
List name of payer G
AMERICAN GENERAL
303.
Ordinary
Dividends
(See
instructions for
Form 1040A, or
Form 1040,
line 9a.)
Note. If you received
a Form 1099-DIV or
substitute statement
from a brokerage
firm, list the firm’s
name as the payer
and enter the
ordinary dividends
shown on that form.
5
6 Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 1040, line 9a. . . . . . . . . . . . . . . . . . . G
Note. If line 6 is over $1,500, you must complete Part III.
You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had
a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust.
Part III
Foreign
Accounts
and Trusts
(See
instructions.)
303.
6
7 a At any time during 2014, did you have a financial interest in or signature authority over a financial
account (such as a bank account, securities account, or brokerage account) located in a foreign country?
See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If ‘Yes,’ are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to
report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing
requirements and exceptions to those requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial
Yes
No
X
account is located G
8
During 2014, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If
‘Yes,’ you may have to file Form 3520. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X
BAA For Paperwork Reduction Act Notice, see your tax return instructions.
FDIA0401L 11/22/14
Schedule B (Form 1040A or 1040) 2014
Profit or Loss From Business
SCHEDULE C
(Form 1040)
Department of the Treasury
Internal Revenue Service
OMB No. 1545-0074
(Sole Proprietorship)
(99)
2014
G Information about Schedule C and its separate instructions is at www.irs.gov/schedulec.
G Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065.
Name of proprietor
Attachment
Sequence No.
09
Social security number (SSN)
JOSEPH D PLUMMER
133-50-5453
A
Principal business or profession, including product or service (see instructions)
C
Business name. If no separate business name, leave blank.
E
Business address (including suite or room no.)
B Enter code from instructions
G 999999
D Employer ID number (EIN), (see instrs)
CONTRACTOR/CONSULTANT
JD PLUMMER SONSULTING
G23679
CALABASAS ROAD SUITE 510
City, town or post office, state, and ZIP code
(1)
X Cash
(2)
Accrual
(3)
Other (specify) G
F
Accounting method:
G
Did you ‘materially participate’ in the operation of this business during 2014? If ‘No,’ see instructions for limit on losses .
H
If you started or acquired this business during 2014, check here. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
I
J
X Yes
No
Did you make any payments in 2014 that would require you to file Form(s) 1099? (see instructions). . . . . . . . . . . . . . . . . . . . .
Yes
X No
If ‘Yes,’ did you or will you file required Forms 1099?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes
No
Part I
1
2
3
4
5
6
7
Income
Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you
on Form W-2 and the ‘Statutory employee’ box on that form was checked . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 2 from line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold (from line 42). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, including federal and state gasoline or fuel tax credit or refund
(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G
1
2
3
4
5
6
7
500,000.
500,000.
500,000.
500,000.
Part II Expenses. Enter expenses for business use of your home only on line 30.
8
9
10
11
12
13
14
Advertising . . . . . . . . . . . . . . . . . . . .
Car and truck expenses
(see instructions) . . . . . . . . . . . . . .
Commissions and fees . . . . . . . . .
Contract labor
(see instructions) . . . . . . . . . . . . . .
Depletion. . . . . . . . . . . . . . . . . . . . . .
Depreciation and section
179 expense deduction
(not included in Part III)
(see instructions) . . . . . . . . . . . . . .
Employee benefit programs
(other than on line 19) . . . . . . . . .
8
9
10
35,332.
25,000.
11
12
62,400.
13
18 Office expense (see instructions). . . . . . . .
19 Pension and profit-sharing plans . . . . . . . .
20 Rent or lease (see instructions):
a Vehicles, machinery, and equipment. . . . .
b Other business property . . . . . . . . . . . . . . . .
21
22
23
24
Repairs and maintenance. . . . . . . . . . . . . . .
Supplies (not included in Part III). . . . . . . .
Taxes and licenses. . . . . . . . . . . . . . . . . . . . .
Travel, meals, and entertainment:
a Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 a
20 b
21
22
23
24,000.
24 a
30,309.
24 b
25
26
27 a
27 b
28
29
32,383.
5,399.
1,532.
308,905.
191,095.
30
Net profit or (loss). Subtract line 30 from line 29.
? If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on
Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates
and trusts, enter on Form 1041, line 3.
? If a loss, you must go to line 32.
32
12,221.
14
b Deductible meals and entertainment
(see instructions). . . . . . . . . . . . . . . . . . . . . . .
15 Insurance (other than health) . . . 15
21,342.
16 Interest:
25 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a Mortgage (paid to banks, etc). . . . . . . . . 16 a
26 Wages (less employment credits). . . . . . . .
b Other . . . . . . . . . . . . . . . . . . . . . . . . . 16 b
27 a Other expenses (from line 48). . . . . . . . . . .
17 Legal & professional services. . . 17
b Reserved for future use . . . . . . . . . . . . . . . .
58,987.
28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . . . . . . . . . . . . . . . . . . . . . G
29 Tentative profit or (loss). Subtract line 28 from line 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829
unless using the simplified method (see instructions).
Simplified method filers only: enter the total square footage of: (a) your home:
and (b) the part of your home used for business:
. Use the Simplified
Method Worksheet in the instructions to figure the amount to enter on line 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
18
19
31
191,095.
If you have a loss, check the box that describes your investment in this activity (see instructions).
? If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on
Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and
trusts, enter on Form 1041, line 3.
? If you checked 32b, you must attach Form 6198. Your loss may be limited.
BAA For Paperwork Reduction Act Notice, see the separate instructions.
FDIZ0112L
10/30/14
All investment is
at risk.
Some investment
32 b
is not at risk.
Schedule C (Form 1040) 2014
32 a
OMB No. 1545-0177
Form
4684
Casualties and Thefts
Department of the Treasury
Internal Revenue Service
A Information about Form 4684 and its separate instructions is at www.irs.gov/form4684.
A Attach to your tax return.
A Use a separate Form 4684 for each casualty or theft.
2014
Attachment
Sequence No.
Identifying number
Name(s) shown on tax return
26
JOSEPH D PLUMMER
133-50-5453
SECTION A ‘ Personal Use Property (Use this section to report casualties and thefts of property not used in a trade or
business or for income-producing purposes.)
1
Description of properties (show type, location, and date acquired for each property). Use a separate line for each property lost or
damaged from the same casualty or theft.
Property
Property
Property
Property
A
B
C
D
Jewlery
1/01/2014
Properties
A
2
3
Cost or other basis of each property . . .
Insurance or other reimbursement
(whether or not you filed a claim)
(see instructions) . . . . . . . . . . . . . . . . . . . . .
2
B
C
D
510,000.
3
Note: If line 2 is more than
line 3, skip line 4.
4
5
6
7
8
9
10
11
12
Gain from casualty or theft. If line 3 is
more than line 2, enter the difference
here and skip lines 5 through 9 for
that column. See instructions if line 3
includes insurance or other reimbursement you did not claim, or you received
payment for your loss in a later
tax year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair market value before casualty or theft. . . . . . .
Fair market value after casualty or theft . . . . . . . .
Subtract line 6 from line 5. . . . . . . . . . . . .
Enter the smaller of line 2 or line 7 . . . .
4
5
6
7
8
9
750,000.
0.
750,000.
510,000.
510,000.
Subtract ln 3 from ln 8. If zero or less, enter -0-. .
Casualty or theft loss. Add the amounts on line 9 in columns A through D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the smaller of line 10 or $100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
11
12
510,000.
100.
509,900.
Add the amounts on line 12 of all Forms 4684 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add the amounts on line 4 of all Forms 4684 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
14
509,900.
? If line 14 is more than line 13, enter the difference here and on Schedule D. Do not
complete the rest of this section (see instructions).
…………….
15
0.
16
If line 14 is less than line 13, enter the difference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
509,900.
17
Enter 10% of your adjusted gross income from Form 1040, line 38, or Form 1040NR, line 37. Estates and
trusts, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
107,762.
13
14
15
Subtract line 11 from line 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Caution: Use only one Form 4684 for lines 13 through 18.
? If line 14 is less than line 13, enter -0- here and go to line 16.
? If line 14 is equal to line 13, enter -0- here. Do not complete the rest of this section.
18
Subtract line 17 from line 16. If zero or less, enter -0-. Also enter the result on Schedule A (Form 1040), line
20, or Form 1040NR, Schedule A, line 6. Estates and trusts, enter the result on the ‘Other deductions’ line of
your tax return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
BAA For Paperwork Reduction Act Notice, see instructions.
FDIZ0901L 06/25/14
402,138.
Form 4684 (2014)
Form
OMB No. 1545-0074
6251
Department of the Treasury
Internal Revenue Service (99)
Alternative Minimum Tax ‘ Individuals
2014
G Information about Form 6251 and its separate instructions is at www.irs.gov/form6251.
G Attach to Form 1040 or Form 1040NR.
Name(s) shown on Form 1040 or Form 1040NR
Attachment
Sequence No.
32
Your social security number
JOSEPH D PLUMMER
133-50-5453
Part I
Alternative Minimum Taxable Income (See instructions for how to complete each line.)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
If filing Schedule A (Form 1040), enter the amount from Form 1040, line 41, and go to line 2. Otherwise,
enter the amount from Form 1040, line 38, and go to line 7. (If less than zero, enter as a negative amount.).
Medical and dental. If you or your spouse was 65 or older, enter the smaller of Schedule A (Form 1040),
line 4, or 2.5% (.025) of Form 1040, line 38. If zero or less, enter -0-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes from Schedule A (Form 1040), line 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the home mortgage interest adjustment, if any, from line 6 of the worksheet in the instructions for this line. . . . . . . . . . . . . . . . . . . .
Miscellaneous deductions from Schedule A (Form 1040), line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If Form 1040, line 38, is $152,525 or less, enter -0-. Otherwise, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax refund from Form 1040, line 10 or line 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment interest expense (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depletion (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss deduction from Form 1040, line 21. Enter as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative tax net operating loss deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest from specified private activity bonds exempt from the regular tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qualified small business stock (7% of gain excluded under section 1202). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of incentive stock options (excess of AMT income over regular tax income) . . . . . . . . . . . . . . . . . . . . . . .
Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Electing large partnerships (amount from Schedule K-1 (Form 1065-B), box 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposition of property (difference between AMT and regular tax gain or loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation on assets placed in service after 1986 (difference between regular tax and AMT) . . . . . . . . . . . . . .
Passive activities (difference between AMT and regular tax income or loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss limitations (difference between AMT and regular tax income or loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Circulation costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term contracts (difference between AMT and regular tax income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mining costs (difference between regular tax and AMT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and experimental costs (difference between regular tax and AMT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from certain installment sales before January 1, 1987. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible drilling costs preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other adjustments, including income-based related adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative minimum taxable income. Combine lines 1 through 27. (If married filing
separately and line 28 is more than $242,450, see instructions.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
1
502,296.
2
3
75,471.
4
5
6
-23,939.
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
553,828.
Alternative Minimum Tax (AMT)
29 Exemption. (If you were under age 24 at the end of 2014, see instructions.)
IF your filing status is. . . .
AND line 28 is not over. . . THEN enter on line 29 . . . .
Single or head of household . . . . . . . . . . . . . . . $117,300 . . . . . . . . . . . . . . . . $52,800
……
82,100
Married filing jointly or qualifying widow(er) 156,500 . . . . . . . . . . . . . . . .
41,050
Married filing separately. . . . . . . . . . . . . . . . . . . 78,250 . . . . . . . . . . . . . . . .
If line 28 is over the amount shown above for your filing status, see instructions.
30 Subtract line 29 from line 28. If more than zero, go to line 31. If zero or less,
enter -0- here and on lines 31, 33, and 35, and go to line 34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31 ? If you are filing Form 2555 or 2555-EZ, see instructions for the amount to enter.
? If you reported capital gain distributions directly on Form 1040, line 13; you reported qualified dividends on Form
1040, line 9b; or you had a gain on both lines 15 and 16 of Schedule D (Form 1040) (as refigured for the AMT, if
necessary), complete Part III on page 2 and enter the amount from line 64 here.
…….
? All others: If line 30 is $182,500 or less ($91,250 or less if married filing separately),
multiply line 30 by 26% (.26). Otherwise, multiply line 30 by 28% (.28) and subtract $3,650
($1,825 if married filing separately) from the result.
30
553,828.
31
151,422.
32
Alternative minimum tax foreign tax credit (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
33
Tentative minimum tax. Subtract line 32 from line 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33
151,422.
34
Add Form 1040, line 44 (minus any tax from Form 4972), and Form 1040, line 46. Subtract from the result
any foreign tax credit from Form 1040, line 48. If you used Schedule J to figure your tax on Form 1040,
line 44, refigure that tax without using Schedule J before completing this line (see instructions). . . . . . . . . . . . .
34
151,182.
35 AMT. Subtract line 34 from line 33. If zero or less, enter -0-. Enter here and on Form 1040, line 45 . . . . . . . . .
FDIA5312L 12/3/14
BAA For Paperwork Reduction Act Notice, see your tax return instructions.
29
35
240.
Form 6251 (2014)
Form
8959
Department of the Treasury
Internal Revenue Service
OMB No. 1545-0074
Additional Medicare Tax
G If any line does not apply to you, leave it blank. See separate instructions.
G Attach to Form 1040, 1040NR, 1040-PR, or 1040-SS.
G Information about Form 8959 and its instructions is at www.irs.gov/form8959.
2014
Attachment
Sequence No.
71
Name(s) shown on return
Your social security number
JOSEPH D PLUMMER
Part I
Additional Medicare Tax on Medicare Wages
133-50-5453
2
Medicare wages and tips from Form W-2, box 5. If you have more
than one Form W-2, enter the total of the amounts from box 5 . . .
Unreported tips from Form 4137, line 6 . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
5
Wages from Form 8919, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add lines 1 through 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enter the following amount for your filing status:
6
Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000
Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000
200,000.
5
Single, Head of household, or Qualifying widow(er). . . . $200,000
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
550,000.
Additional Medicare Tax on Medicare wages. Multiply line 6 by 0.9% (.009). Enter here and go
to Part II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
4,950.
1
7
Part II
1
750,000.
2
3
4
750,000.
Additional Medicare Tax on Self-Employment Income
8
Self-employment income from Schedule SE (Form 1040), Section
A, line 4, or Section B, line 6. If you had a loss, enter -0- (Form
1040-PR and Form 1040-SS filers, see instructions.). . . . . . . . . . . . .
9
Enter the following amount for your filing status:
Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Single, Head of household, or Qualifying widow(er). . . .
8
176,476.
9
200,000.
750,000.
0.
$250,000
$125,000
$200,000
10
Enter the amount from line 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12
Subtract line 10 from line 9. If zero or less, enter -0- . . . . . . . . . . . .
Subtract line 11 from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
176,476.
13
Additional Medicare Tax on self-employment income. Multiply line 12 by 0.9% (.009). Enter here and
go to Part III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
1,588.
Part III
10
11
Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation
14
Railroad retirement (RRTA) compensation and tips from Form(s)
W-2, box 14 (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
Enter the following amount for your filing status:
16
Married filing separately . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000
15
Single, Head of household, or Qualifying widow(er). . . . $200,000
Subtract line 15 from line 14. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Medicare Tax on railroad retirement (RRTA) compensation. Multiply line 16 by 0.9% (.009).
Enter here and go to Part IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Married filing jointly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
Part IV
18
14
$250,000
17
Total Additional Medicare Tax
Add lines 7, 13, and 17. Also include this amount on Form 1040, line 62, (Form 1040NR, 1040-PR,
and 1040-SS filers, see instructions) and go to Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part V
16
18
6,538.
4,950.
Withholding Reconciliation
19
Medicare tax withheld from Form W-2, box 6. If you have
more than one Form W-2, enter the total of the amounts
from box 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20
Enter the amount from line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
15,825.
750,000.
21
Multiply line 20 by 1.45% (.0145). This is your regular Medicare
tax withholding on Medicare wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
10,875.
22
Subtract line 21 from line 19. If zero or less, enter -0-. This is your Additional Medicare Tax
withholding on Medicare wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
23
Additional Medicare Tax withholding on railroad retirement (RRTA) compensation from Form W-2,
box 14 (see instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
Total Additional Medicare Tax withholding. Add lines 22 and 23. Also include this amount with
federal income tax withholding on Form 1040, line 64 (Form 1040NR, 1040-PR, and 1040-SS filers,
see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
24
BAA For Paperwork Reduction Act Notice, see your tax return instructions.
FDIA6301
10/16/14
4,950.
Form 8959 (2014)
ACCT 542 Homework Project
Spring Semester 2021
Accompanying these instructions is a mock 2014 tax return of Joe D. Plummer. This
homework project has 4 due dates beginning next week and each week thereafter. I have
highlighted the due dates below.
Instructions
Pretend you are an IRS Revenue Agent and have been assigned Mr. Plummer’s tax return for
examination (audit). The return contains various entries which you will need to carefully
examine.
This is not a group project. You should email me your responses to the questions before each
class begins on the dates specified below.
The return was filed on 4/15/2015 and contains the following forms and schedules: Form 1040
& Schedules A, B, C & SE. It was prepared by the taxpayer himself on Turbo Tax. Assume it
was filed with the IRS as you see it, even though it contains some missing information. Assume
it was signed by the taxpayer, and had a W-2 attached to it issued by ABC Construction Corp.,
555 South Victoria Ave., Ventura, CA and that the W-2 was for $1,500,000.
Review Form 1040 and each schedule carefully. See if any of the information from one
schedule might relate to another schedule – in other words, given what you see in one
schedule, does that information correspond or conflict with information on another schedule.
What makes this exam different from most of your past exams at CSUN is that there is no right
and wrong answer. This project requires that you make certain inferences from the information
you are provided and then make some factual assumptions or suppositions about the taxpayer,
his lifestyle, his assets, his business dealings, his sources of income, his expenses, the nature
of his business, the nature of his income, etc.
This project requires you to use your common sense and everyday experiences, as well as your
basic business, accounting and tax knowledge. What I am looking for most is your analysis,
followed by the organization of your answers.
1) Prepare a written Pre-Audit Analysis as follows
a. Identify and prepare a list of all the items on the tax return that appear to be strange,
unusual, questionable, excessively large or excessively small in relation to other information on
the return, etc. To do this, provide a one or two sentence explanation for each such item. That
is, tell me why you identified the item & what the item tells you about the taxpayer (meaning,
about his assets, about his income, about his standard of living/life style, etc.) Also, tell me if
you are drawing any inferences from the dollar value of the item, how it is labeled/described on
the tax return, how it is being reported or deducted.
2) Prepare an Audit Plan
a. Prepare a list of twelve (12) deductions shown on the return that you want to audit. For each
of these deductions that you list, provide a one or two sentences for each explaining why you
have identified the deduction. In other words, explain why you feel there is a possibility the
deduction may be improper/non-deductible, excessive/not reasonable, etc.
b. Prepare a list of five (5) income items shown on the return that you plan ask about during
your interview of the taxpayer or his representative. For each item, explain in one or two
sentences why you selected these items and what inferences you are drawing from the amount
of income, from the manner in which it is reported, from the label that is placed on it, from the
category of income it falls under, etc.
3) Document Request and Background Research
c. For each of the 12 deduction items and 5 income items that you have selected for audit, list
in a few sentences list:
i. What documents you are requesting that the taxpayer provide to you
during the audit appointment(s) for each of the items you identified that you
are examining/auditing.
ii. What public records you will review before your interview to be armed
with information so that you know whether the taxpayer or his
representative is being truthful.
iii. What internal IRS reports/transcripts can you review in order to
determine if the taxpayer reported all of his income and to determine the
source of his income in case the source is not clear on the return.
iv. With respect to the 12 deductions, make one or two assumptions of
what the taxpayer might tell you or the documents he might provide that
would make the deduction entirely non-deductible (other than lack of proof
of payment) or partially non-deductible. Tell me what your assumption(s)
is/are and how that would influence the outcome of whether that particular
expense is deductible.
v. With respect to the 5 income items, make one or two assumptions
about what the taxpayer might tell you about the source or nature of the
income. In other words, give me one or two examples of what the taxpayer
might say that may lead you to believe that:
1. there may be other unreported income
2. there may be related persons or entities whose information may
shed more light on this taxpayer and/or his income from other
sources. If so,
a. what information or documents will you ask for relating to
such related persons or entities.
b. are there any related party documents you wish to review,
if so please explain in one or two sentences what these
documents might be and what they might reflect about the
taxpayer, his business dealings, etc.
4) The Pre-Audit Phone Call
Assume that you will be using a classic investigative technique – the Surprise Phone Call.
You call the taxpayer at his home or his work. You identify yourself, gently state that his 2014
return has been selected for review, and that you are calling to set up an appointment in the
next few weeks to meet with him at his residence for a few hours. After he recovers from the
initial shock of the news, you ask him if he has few minutes to go over some preliminary matters
before you come out so as to help narrow your audit to no more than what is absolutely
necessary. Assume he agrees to answer your questions.
List fifteen (15) questions you would like to ask in order of importance to pin the facts down
before the taxpayer gets a chance to speak to a representative. Remember, once he hires a
representative, your questions will primarily be answered by the representative.
Good luck and keep in mind the following general directives of the IRS:
The mission of the IRS is to “Provide America’s taxpayers top quality service by helping them
understand and meet their tax responsibilities and by applying the tax law with integrity and
fairness to all.” This mission statement describes the IRS’ role and the public’s expectation
about how the IRS should perform that role.
•
•
•
In the United States, the Congress passes tax laws and requires taxpayers to comply.
The taxpayer’s role is to understand and meet his or her tax obligations.
The IRS’ role is to help the large majority of compliant taxpayers with the tax law, while
ensuring that the minority who are unwilling to comply pay their fair share.
How this plays out in the tax audit world is as follows:
1. It is the Revenue Agent’s duty to help achieve the taxpayer’s compliance with the tax laws.
2. The Revenue Agent must be courteous but firm with taxpayers
3. When a tax issue can go either way, the Revenue Agent must protect the interests of the
government.
4. Unless otherwise told to do so, a Revenue Agent must not spend too much time on matters that
will not yield tax dollars for the government.
5. The Revenue Agent must try to close the case in 6 months or less when possible, and if that is
not possible, he/she must articulate to management why additional time is needed.
And these more specific guidelines from the Internal Revenue Manual [next page]
Section 4.10.2.3 (08-01-2007) — In-depth Pre-contact Analysis
1.
The examiner is responsible for determining the scope of the audit, beginning with the issues identified by
the classifier on the classification check sheet. The examiner must perform a pre-contact analysis including
a thorough review of the case file to identify large, unusual, or questionable items (LUQs) beyond those
selected on the classification check sheet. The examiner should take the following actions:
A.
Review the complete tax return including line items, credits, the balance sheet, elections and
schedules, and any other items attached to the return.
B.
[omitted]
C.
Review internal and external data from the following sources:
IRP Transcripts,
Asset locator / people locator, and
Internet Research.
D.
[omitted]
————————————–Section 4.10.2.3.1 (08-01-2007) – Large Unusual Questionable Items (LUQs) Defined
1.
The definition of a large, unusual, or questionable item will depend on the examiner’s perception of the
return as a whole and the separate items that comprise the return. Some factors to be considered when
identifying LUQs are:
A.
Comparative size of the item — an expense item of $6,000.00 with total expenses of $30,000.00
would be a large item; however, if total expenses are $300,000.00, the item would not be generally
considered a large item.
B.
Absolute size of the item — despite the comparability factor, size by itself may be significant. For
example, a $50,000 item may be significant even though it represents a small percentage of
taxable income.
C.
Inherent character of the item — although the amount of an item may be insignificant, the nature of
the item may be significant; e.g., airplane expenses claimed on a plumber’s Schedule C.
D.
Evidence of intent to mislead — this may include missing schedules, incomplete schedules, misclassified entries, or obviously incorrect items on the return.
E.
Beneficial effect of the manner in which an item is reported — expenses claimed on a business
schedule rather than claimed as an itemized deduction.
F.
Relationship to other items — incomplete transactions identified on the tax return. For example, the
taxpayer reported sales of stock but no dividend income.
G.
Whipsaw issues — occur when there is a transaction between two parties and characteristics of
the transaction will benefit one party and harm the other. Examples include alimony vs. child
support, sale vs. rental/royalty, employee vs. independent contractor, gift vs. income.
H.
[omitted]
I.
Missing items — consideration should be given to items which are not shown on the return but
would normally appear on the returns of similar taxpayers. This applies not only to the examination
of income, but also to expenses, deductions, etc., that would result in tax changes favorable to the
taxpayer.
Balian Law Group
Tax Planning · IRS & Tax Court Representation · Trust & Probate Litigation
John M. Balian, Esq., M.S. Tax
Certified Taxation Law Specialist
Board of Legal Specialization, State Bar of California
___________________________________________________________________________________________
16133 Ventura Blvd., Penthouse Suite
Encino, California 91436
Tel: (818) 776-2000
E-mail: jb@bbblaw.com
This seminar hand-out is designed to provide our colleagues general information regarding the subject
matter covered. It is not designed to take the place of legal, tax accounting, or professional tax advice.
Sensitive Issue Audits
I.
First steps in audit representation – Identification of the Problems
a. Review of tax return for unusual items
1. How are deductions or income labeled
2. Relationship of balance sheet to profit and loss
3. Year to year comparison – % change
4. Ratio analysis
i. Gross profit ratio – compare to industry norms
ii. Individual expenses as a % of income
5. Testing for economic reality of 1040 – was there enough income to
support mortgage, property tax and normal living expenses
b. Do a Bank Deposit Analysis
1. Are some of the deposits loans, gifts, transfers in from other accounts
c.
Life Style
1. Do your own “drive-by” assessment of the residence and residential
area (the IRS will)
2. Do a quick monthly budget (any private school costs?)
3. Does the client have any hobbies, interests, pursuits outside of work
that costs money (boating, flying?)
Note: The IRM no longer permits routine Life Style Audits. Unreported
income must be an issue in order to ask the life style questions.
d. Do a Quick & Dirty Net Worth Analysis
1. Also investigate your own client
i. Public Records search for corps, LLCs, DBAs, business
licenses, properties, law suits, etc.
a. What to do if client was not truthful with you?
b. How do you get out of the engagement ethically?
II.
Exposure – Client’s and/or Yours
A. Accessing Potential for Changes in the Government’s Favor
1. Tally up potential audit changes & prep client for the possible worst case
2. Is there 20% negligence penalty or 75% civil fraud penalty potential
B. Did the Client Just Make You a Consultant – Do you know too much?
1. Will your knowledge hurt the client?
a. Was there a need for Attorney-Client Privilege earlier in the case?
1
i. Now that you’ve uncovered so much damaging information,
can you be called to testify against your client
* No – if still a civil audit (Cir. 230 grants limited
accountant privilege in non-criminal & non-tax shelter
matters.
* Yes – if criminal tax investigation or tax shelter
b. Working under the Attorney-Client privilege
i. The “Kovel Letter” – accountant essentially becomes staff
member of attorney’s office for this engagement
ii. Payment of Fees by Client to Accountant O.K. if under Kovel
Letter
2. What if the IRS asks you a difficult question you don’t want to answer
i. Can you say, “I don’t know” – puts you at risk if not true
ii. Don’t make yourself the target – The Martha Stewart Problem:
Title 18 United State Code section 1001
“…whoever, in any matter within the jurisdiction of the executive,
legislative, or judicial branch of the Government of the United States,
knowingly and willfully—
(1) falsifies, conceals, or covers up by any trick, scheme, or device a
material fact;
(2) makes any materially false, fictitious, or fraudulent statement or
representation; or
(3) makes or uses any false writing or document knowing the same to
contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years…”
iii. IRS can and will contact third parties to confirm the story
Example: Housekeeper/babysitter on company payroll
C. Is there Potential for Criminal Prosecution
1. Badges/Indicia of Fraud
a. Actions to hide income & sophistication of scheme
b. Actions to hide assets
i. Off-shore entities
ii. Assets in name of others (but client controls and benefits from
the assets)
c. Client’s education & training
2. What others (witnesses) know and or would say
i. Ask about disgruntled employees, ex-spouses, ex-partners,
people with an ax to grind or pending suits or known claims
ii. What does the bookkeeper know – interview
iii. What does the prior accountant know – interview
iv. What do employees know – interview
III. Consider Coming Forward
A. IRS Policy of not prosecuting if taxpayer comes forward before IRS Criminal
Investigation Begins
2
1. Filing Amended Returns – amending 1040s in the middle of a Corporate audit
a. Risk of making admissions
b. Carefully word the amended return Explanations Section
i. No admissions
ii. No false statements
iii. Consider leaving blank if can’t do i. and ii. above
2. Don’t wait too long to come forward – taxpayers knowledge that an exemployee is about to turn him in to the IRS may be weighed in favor of
prosecuting despite taxpayer coming forward before an IRS criminal investigation
is commenced
3. Negotiating a Resolution with the IRS anonymously – almost no chance
a. Attorney can run hypothetical fact pattern with IRS Criminal Division
IV. Dealing with the Revenue Agent
A. Can you respectfully decline the IRS’ request to interview the client
1. Why would you?
2. How do you?
3. The Summons Power
B. Why the Agent wants a tour of the business – never know what will turn up
C. What if the Agent insists on both the interview and a tour of the business
D. Where will the audit take place
1. Your office – preferable
2. Client’s place of business – could be disruptive to client
E. Dealing with Document Requests
1. Do you have to provide everything the IRS has asked for?
F. Dealing with a Summons
1. What is a Summons – an administrative subpoena
2. Failure to cooperate with Summons
a. IRS may enforce through federal court
b. Court may impose civil fines or even jail time until taxpayer cooperates
with court order to turn over documents
V. Preparing for interview
A. Mock interview is o.k.
B. Molding client testimony in such as way that the testimony will be false or misleading
is:
1. Obstruction of Justice – a felony
2. Corruptly Impeding the IRS’ Functions – a felony
3. Conspiracy to make a false statement or commit tax fraud
____________________________________________________________________________
John M. Balian began his tax career in 1986 as a Revenue Agent with the IRS in Los Angeles.
Today, John’s work focuses upon IRS audit, IRS appeals & U.S. Tax Court representation, as
well as tax planning for business owners, investors, executives & plaintiffs. John litigates
probate, trust and inheritance disputes in the Superior Court and functions as an expert witness in
tax malpractice cases. John is an adjunct faculty member at CSUN where he teaches Federal
Tax Procedure and is the faculty adviser to CSUN’s Bookstein Tax Clinic – a low income clinic in
which undergraduate accounting and graduate tax students represent indigent clients with tax
collection and tax audit issues.
3
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