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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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TAX class help!

Customer Question

I am in a tax class and need help with the following return, it is all 2003.

Submitted: 11 years ago.
Category: Tax
Customer: replied 11 years ago.
Using the following information prepare a joint federal income tax return for Jerry and Janet Apps.
Jerry R. (SSNNNN-NN-NNNN and Janet K. (SSNNNN-NN-NNNN Apps, married, under age 65, file a joint return. They reside at 410 E. Vernon Avenue, Carlock, IllinoisNNN-NN-NNNN Both elect to have $3 go to the presidential fund.
Their household includes David A. Apps their 12yr old son (SSNNNN-NN-NNNN, AND Edwin R. Apps (SSNNNN-NN-NNNN, Jerry's 70 Yr old father. Janet and Jerry provide over half the support of both David and Edwin. David has no income of his own; Edwin received $4,500 in social security benefits during the year.
Jerry, who works as a carpenter for Evergreen Enterprises, received the following information on his Form W-2. Jerry is not involved in an employer-sponsored plan.

Gross wages;$42,000
Social Security and medicare tax with held3,213
Federal income tax withheld 2,160
State income tax withheld 950

Janet owns and operates J&J Networking, a Dolemore distributorship. The principal business code is 454390. Janet has no employer ID number. She is a cash basis taxpayer but uses the accrual basis in her business. She uses the cost method for valuing the inventory. No changes have been made in the inventory system. Janet operated her business for all 12 months and had an office in her home. She materially participated in the business throughout the year.
Information regarding Janet's business operation follows:

Gross receipts$30,200
Returns and allowances 200
Beginning inventory700
Purchases 22,625
Ending inventory&nb sp;&nb sp;825

Advertising$100&nb sp;Office expense$80
Bank Service charge   24Supplies&n bsp; 50
Car expenses 675Travel&nb sp;400
Commissions& nbsp;1,200&n bsp;Meals/Entertainment180
Depreciation for equipmentBusiness seminars264
Placed in service prior toOther business taxes560
2003&n bsp;625  ;Misc. expenses 35
Dues/Publications220&nbs p;Freight expense260
Insurance (business) 150

Janet uses her personal car in her business. She keeps good records of her business mileage and uses the standard mileage method. The car was first used in the business on May1, 2002. During 2003 Janet drove 7,631 miles, of which 1,875 were for business and 5,756 were personal.

Information relating to the home follows:

Total area of home&n bsp;1,800 square feet
Area used for business&nbs p;180 square feet
FMV of home, for purpose of Forms 8829, line 35$150,000
Adjusted basis of home, for purpose of Form 8829, line 35$115,000
Value of land, Form 8829, line 36&nbs p; $20,000
Applicable depreciation percentage, Form 8829, line 39 3.175%
Mortgage interest&nbs p;   $6,250
Real estate taxes& nbsp;   $2,400
Homeowners insurance&nb sp;$680
Utilities&nb sp;&nb sp;$3,200

The Appses own a four-unit apartment building, which they actively manage. The Appes paid $125,000 for the building in 1994 and depreciate it using MACRS over 27.5 years. The building is located atXXXXXin Carlock. All units were rented for the entire year.
Information on the apartments follows:

Revenue from rents& nbsp;$33,600
Expenses:&nb sp;
Real estate taxes& nbsp; $4,800
Utilities&nb sp;   $1,780
Insurance&nb sp;   $1,550
Cleaning and maintenance& nbsp; $5,200
Legal and professional fees&n bsp;$125
Mortgage interest&nbs p; $7,200
Repairs  ;  ;$827
Supplies&nbs p;&nbs p;$325
Depreciation    $4,545

The Appses had other income consisting of the following:

Interest from Champion Savings  ;$750
Interest on bonds from the State of Illinois$430
Qualified dividends from General Morris Corp.$120
Qualified dividends from Eagle Corp.$150
Qualified dividends from Roper Corp. $70

The Appses also sold the following securities during the year:

Number CompanyDate Cost&n bsp;Date Sales
Of sharesAcquired&nbs p;Sold Price
100Roper Corp5-1-005,000&nb sp;6-12-037,500
   50Fastco Corp2-14-033,250&n bsp;7-20-032,950
200Eagle Corp3-16-996,200&n bsp;8-10-038,100
100South Corp4-12-031,500&n bsp;11-24-031,550

Neither Jerry nor Janet had any interest in a foreign trust or account.

The Appses made the following payments during the year:

Medical expenses (unreimbursed):

Jerry& nbsp;JanetDavid&nb sp;EdwinTota l
Prescription med50& nbsp;20025&n bsp;100375
Doctor bills60  ;50030 200790
Dentist bills150&nbs p;40200  ;0390
Hospital bills0 1,8000 2,1003,900
Transportation8&nb sp;7224  ;16120
Eyeglasses0& nbsp;0125&nb sp;0125
Over the counter
Medicine0&nb sp;5030  ;70150

Sales tax&nb sp;$1,200
Balance due on 2002 state income tax return625
Balance due on 2002 federal income tax return 725
Estimated federal income at payments 1,000
Real estate taxes& nbsp;2,400

Mortgage interest&nbs p;6,250
Personal interest   975

Church 1,200
United way&nb sp;100
Presidential election campaign&nbs p;50

In addition to these cash contributions, the Appses donated five shares of S&W common stock to their church on July 30. The stock had been purchased on December 15, 2001, for $200. The fair market value of the stock on July 30 was $400.
Other payments the Appses made in 2003 are as follows.

Rental of safe deposit box for securities24
2002 tax preparation fee (personal return)300
Union dues for Jerry& nbsp;1,200
Automobile license  ;50
IRA for Jerry& nbsp;1,800
IRA for Janet& nbsp;   500

In September, the Apps received a $400 check from the IRS for the child tax credit increase enacted earlier in the year.

{2003 Forms to be used}

Expert:  Mara replied 11 years ago.
Customer: replied 11 years ago.
Reply to Mara's Post: This is a text book question, not real SSN's.
Expert:  Mara replied 11 years ago.
Customer: replied 11 years ago.
Reply to Mara's Post: You don't know of anyone who could help me do you?

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