Question

Week 5: Comprehensive Case Study 2

Steve Jackson (birthdate December 13, 1965) is a single taxpayer living at 3215 Pacific Dr., Del Mar, CA 92014. His Social Security number is 465-88-9415. In 2017, Steve’s earning and income tax withholding as the manager of a local hotel are:

Earnings from the Ocean View Hotel                                                      $121,500

Federal income tax withheld                                                                       18,500

State Income tax withheld                                                                             9,300

Steve’s other income includes interest from General Electric bonds of $2,550 and interest on a savings account at Wells Fargo Bank of $3,215. Also, Steve received tax-exempt interest of $29,440 on private activity bonds that is subject to alternative minimum tax. Steve had full medical coverage for the entire tax year.

During the year, Steve paid the following amounts (all of which can be substantiated):

Home mortgage interest                                                                          $31,575

Credit card interest                                                                                      1,760

Auto insurance                                                                                                900

State income taxes paid in 2016 (for 2014 audit)                                     12,600

Property taxes on personal residence                                                          6,200

Kaiser HMO premiums                                                                                4,800

Other medical expenses                                                                                  790

CPA fees paid to handle 2014 state audit                                                    7,000

Charitable contributions

      Girl Scouts                                                                                                 800

      San Diego State University (contribution)                                        10,000

      Italian Red Cross                                                                                       250

Required: Complete Steve’s federal tax return for 2017. Use Form 1040, Schedule A, Schedule B, and Form 6251, which can be found on the IRS website. Make realistic assumptions about any missing data.

Answer 1

Steve Jackson
Earnings from Ocean view hotel	1,21,500
Federal Income tax witheld	18,500
State income tax witheld	9,300
interest from General Electric bonds	2,550
interest on savings accounts at Wells Fargo Bank	3,215
Gross Total Income	1,55,065
Deductions:
Home Mortgage interest	31,575
Auto Insurance	900
State income taxes paid in 2016 (for 2014 audit)	12,600
Kaiser HMO premiums	4,800
Other medical expenses	790
CPA fees paid to handle 2014 state audit	7,000
Interest on Savings Account	3,215
Total (A)	60,880
Charitable Contributions:
Girls Scouts	800
San Diego State University (Contributions)	10,000
Italian Red Cross	250
Total (B)	11050
Grand Total Deductions (A+B)	71,930
Income Chargeable to tax	83,135