Noah and Joan Arc live with their family at 4342 Josie Jo, Santee, CA 92071. Noah’s Social Security number is 434-11-3311; Joan’s is 456-87-5432. Noah owns/operates a pet store whereas Joan is a fire-fighter for the city in Santee.
- They have two children, a son named Billie Bob (Social Security number 598-01-2345), who is 7, and a daughter named Mary Sue (Social Security number 554-33-2411), who is 4. The Arcs paid $3,200 to the Roundup Day Care Center to take care of Mary Sue while they were at work. Since Joan is a firefighter, she’s home in the afternoon to care for Billie Bob after school.
- For the current year, Joan’s W-2 from the city fire department is located. Noah made estimated federal income tax payments of $12,000 and estimated state income tax payments of $1,020 during the current year.
- Noah’s pet store is located at 18542 Mission Road, Santee, CA 92071. The name of the store is “The Arc,” and its taxpayer ID number is 95-9876556. The beginning inventories and ending inventories are both $10,000. The revenue and expenses for the year are as follows:
- Sales revenue $ 144,300
- Expenses: Cost of sales $61,900
Insurance 780
Accounting fees 1,800
Wages 25,100
Payroll taxes 2,250
Business meals (total) 400
Utilities 2,650
Rental expense 7,600
6. Noah and Joan paid the following amounts during the year (all by check):
Political Contributions $250
Church donations $2625
Real Estate taxes on their home $1350
Medical fees $700
Tax Return Prep fees $350
Credit card interest fees $220
Automobile insurance premiums $600
Uniforms for Joan $125
7. Noah likes to invest in the stock market. His Form 1099-B showed the following information for Noah’s stock sales:
Stock Date Acquired Date Sold Sales Price Cost Basis
Blue Co 02/11/06 08/15/16 $4500 $2400
Yellow Co 01/13/16 06/05/16 $6000 $5300
Red Co 10/02/07 10/07/16 $12200 $1600
The expenses of sale are included in the cost basis. Noah has a long-term capital loss carryover from last year of $2,350.
8. During the year, Noah and Joan received the following qualifying dividends:
Exxon: $302
Texas Utilities: $220
All stocks, bonds, and savings accounts were purchased or established with community property.
9. Noah and Joan own rental property located at 6431 Gary Ct., San Diego, CA 92115. The revenue and expenses for the year are as follows:
Insurance $575
Interest Expense $6870
Property Taxes $1000
Miscellaneous Expense $600
Depreciation on the house acquired in 1992 $3000
10. All members of the Arc household were covered for the entire year under health care insurance through Joan’s employer.
11. The Arcs paid California general sales tax of $976 during the year.
- Required: The following forms and schedules are required:
Form 1040
Schedule E
Schedule A
Schedule SE
Schedule B
Form 2441
Schedule C
Form 8949
Schedule D
Qualified Dividends and Capital Gain Tax Worksheet
