ACCT 2690 – Capstone Accounting – Personal and Business Taxation
Spring 2014 Name: _____________________________
Date: ______________________________
Complete the following project using the knowledge you attained in ACCT 1610 Personal Income Tax
and ACCT 2610 Business Income Tax. You are going to manually prepare the federal tax return for
Samson and Delilah Athena. You will be expected to complete the entire return with the necessary
current tax forms which can be downloaded from the www.irs.gov web site. The dates are given such
that the year the tax return is being completed is year one. Example, if you are working with the tax
forms for 2013, 2013 would be the first year in a series of years—2013, 2012, 2011, 2010, 2009—and
2009 would be four years ago. Although Samson does not believe his tax return will be unduly
complicate, he does realize his limitations and came to you for your assistance. The accountant who
helped him last year retired. You are to prepare his income tax return for this year in good form. Be
sure they are assembled in the correct numeric order, the same as you would submit them to the IRS.
Samson, a world renowned strong man and athlete, is employed as an owner and a trainer for his
business “Good Body Health Club”. To some people, he is just another long-haired strong man living a
life of earlier eras. Delilah, his vivacious wife, is also not your stereo-typical “blonde”. She also happens
to be employed as a barber and hairstyling consultant at “Noah’s Hairstyling Salon”.
Samson and Delilah Athena live with their family at 4323 Elaine Way, Kearney, Nebraska 68847.
Samson’s social security number is 413-11-4766, while Delilah’s is 429-11-2785. Their lan line telephone
number is 308-477-9625. Both are in their mid- forties and enjoy good health. Both have excellent
eyesight, although Samson has occasionally complained of blackouts when Delilah cuts his hair.
Samson, born July 1, 45 years ago, and Delilah, born April 15, 43 years ago, have been married 25 years
and have always lived in Nebraska. In the past, they always filed their tax returns as married filing
jointly. They plan to continue to file the same this year. However, this year they both would like to have
part of their taxes go to the Presidential Election campaign fund.
Samson and Delilah have three children: Cain, born January 1, age eighteen, social security number
501-18-9932; Abel, born February 10,age thirteen, social security number 503-11-6211; and Seth, both
July 4, age five, social security number 508-62-3312.
Cain graduated from Kearney High School in May this year and started his freshman year at the
University of Houston, 210 Education Boulevard, Houston, Texas 77005 in August. He earned $3,000 on
a summer job, which he deposited in a savings account and did not use it for his support. Samson sent
Cain $300 per month (August through December) so that Cain would not have to use his personal
savings for living expenses. Samson and Delilah also helped pay for his tuition, fees, books, board and
room, and purchased some of his clothes. Cain’s tuition and fees totaled $11,250, books were $1,250
and board and room was $14,500 for the fall semester and received a Form 1098-T from the University.
Not being a totally serious student in high school, Cain did not receive any scholarships.
Abel is proving to be a very serious student with high academic standards already set in middle school.
Little Seth just started kindergarten this fall and has already decided that he is going to follow in his
father’s footsteps as a strong man and take over his dad’s business when he retires. Since Samson solely owns and works full-time at the Good Body Health Club at 2731 Spa Avenue,
Kearney. He submitted the business records for the club for you to use this year. He began this
business on February 10, four years ago. The EIN number for the business is 47-0996023 and the
business code for his health club is 812190. Since he provides only a service, he uses the cash basis
method of keeping his books. He believes he has given you everything you need to complete the
business portion on the return. He felt there was nothing required a filing of Form 1099-Misc.
Business information submitted by Samson:
Revenue:
General Membership Fees
Private Trainer Fees $160,000.00
100,000.00 Expenses:
Advertising
12,340.00
Car, Truck, miles, expense
?
Depreciation
?
Insurance
(Health Insurance is made available
to all full-time employees but no
premiums are paid by the company)
On the building
3,100.00
On the equipment
2,400.00
Liability
14,700.00
Interest related to building mortgage 11,480.00
Last year’s business portion of
accounting and tax work
445.00
Office expenses
3,850.00
Repairs and Maintenance:
Painted walls
145.00
Exercise Equipment repairs
385.00
Bathroom plumbing repairs
985.00
Broken lights
375.00
Supplies
1,345.00
Taxes:
Real property
5,275.00
Personal property (equip.)
2,810.00
Payroll taxes
8,267.60
Travel
?
Utilities:
Telephone
3,600.00
Electricity
3,260.00
Garbage
580.00
Water and Sanitation
1,200.00
Natural gas
2,750.00
Wages:
One full-time office assistant
40,000.00
6 part-time workers
62,400.00 Samson also included a list of the equipment and furniture in the business that needs to be depreciated.
He has always had the accountant use the MACRS method for figuring the depreciation and wishes the
same thing for this year. He has also never taken advantage of the bonus year depreciation nor the
Section 179 expensing of any of his previous purchases and does not wish to this year either. All
purchases made by Samson were new purchases with no trade-ins. Assets in Business
Purchase Date
Building
February 10, four years ago
(Cost of land included in the price is $40,000)
Office Equipment:
Desk
February 10, four years ago
Chairs
June 1, two years ago
Computer & Printer
August 25, two years ago
File Cabinets
July 1, two years ago
Storage credenza
February 10, four years ago
Workout and Training Equipment:
Elliptical machines
February 10, four years ago
June 15, three years ago
Treadmills
February 10, four years ago
Stationary bikes
February 10, four years ago
April 26, this year
Weight machines
September 1, three years ago
Items for the weight and training room:
Rubber floor mats
August 1, three years ago
Storage weight racks February 10, four years ago
May 23, a year ago Price Paid
$359,000.00 400.00
1,080.00
1,500.00
750.00
490.00
2,600.00
2,750.00
5,200.00
2,400.00
699.00
4,800.00
1,378.00
281.00
481.00 There are no vehicles dedicated to the business because Samson does not do that much transportation
or travel-related business. However, he did some traveling this year to promote the health club and
entertain customers. He drove is personal car and kept records of his business related miles only. The
business mileage totaled 2,600 miles this year. He did not keep records of the gas used or repairs made
because his total miles driven with the vehicle this year was 18,954 miles. These miles were all personal
or commuting miles except the miles for business identified earlier. Five of the business trips required
him to stay two to three days at a specific location. He incurred $1,280 in lodging and $625 in meals. He
did not incur any parking fees nor toll fees on his travels. Samson drives a 2012 Ford Edge that was
purchased new on January 2, 2012. No other vehicle was traded in at the time of the purchase.
However, being so busy with keeping his muscles well-tuned, he did not have time to keep track of the
motor vehicles costs.
Delilah began work in February two years ago for a barber in Kearney—Noah’s Haircutting, 1692 Salon
Street, Kearney, EIN No. 47-1975331. Her Form W-2 for the year included the following:
Wages, tips, and other compensations
$39,565.00
Total Social Security and Medicare wages
42,245.00
Social Security tax withheld
2,619.19
Medicare tax withheld
612.55
Federal Income tax withheld
4,744.95
State income tax withheld
854.10 In addition to their earnings, Samson received the following amounts on Form 1099s for dividends and
nonemployee compensation:
Dividends on IBM stock (ordinary and qualified
$100.00
Dividends on Chrysler stock (ordinary and qualified)
500.00
Dividends on savings in Employee Federal Credit Union
40.00
Samson had modeling fees for Camel Power drink advertising
1,000.00
Samson sold three sets of stock this year and received a Form 1098 from Ameritrade for each of these
sales:
100 shares of McDugall’s Burgers stock—sold on April 1 this year for $110 a share. They were
purchased for $93 a share on December 20 two years ago.
120 shares of Lights Bright stock—sold on November 23 this year for $95 a share. They were
purchased for $98 a share on March 10 five years ago.
45 shares of Slim Look stock—sold on March 14 this year for $80 a share. They were purchased
for $45 a share on May 20 last year.
Samson and Delilah received Form 1099s for interest earned from:
First National Bank savings account
150.00
First Federal Security investments
1,250.00
(They cashed a CD early at First Federal Security, receiving a penalty of $135.00.)
U.S. Government bonds
125.00
(The bonds, purchased in 1991, were valued at $1,000.00 when they were cashed. The
bonds were used to help pay for some of Cain’s college education.)
Samson and Delilah did not the sell the home they purchased on January 1, 25 years ago, when they
were first married. They converted it to a rental home 10 years ago. When they completed the
conversion, the home had a fair market value of $85,000 while they originally paid $40,000 on the home
25 years ago. The land had a $15,000 value 25 years ago and has a fair market value at the time of
conversion of $28,000 today. The house is located at 812 E. Lovely Lane, Kearney, NE 68847. During
the current year, Samson and Delilah received $850 a month for each of the twelve months this year in
rental income from the tenants and paid the following expenses:
Association dues
$ 400
Insurance
130
Mortgage interest
900
Real estate taxes
1,100
Repairs
320
Utilities
1,440
Depreciation on home
?
Seth, being so young, required daycare while Delilah worked. Delilah as fortunate enough to have found
Babylonian Care Center, 2917 Avenue A, Kearney, NE 68847, employee ID number 47-0792651. Seth
has enjoyed being there during the afternoons after being in kindergarten in the mornings since August
25. The total daycare costs were $1,750.00 for the year.
Samson and Delilah believe they might be able to itemize their deductions and gave you a list of the
items they paid by check, among other things, this year:
Medicine and drugs from prescriptions
$157.00
Vitamins and mineral supplements
65.00 Doctor expenses
320.00
Dentist expenses
175.00
Glasses for Samson (after all, he is past 40)
85.00
Bottled water
75.00
Hospital costs for Abel’s appendectomy
258.00
(The above amounts are what the insurance company did not pay in each situation.)
Medical insurance premiums (These premiums are related to the policy established
through Samson’s business, but Samson pays his own premiums,
not the company)
16,255.00
Personal automobiles’ insurance
975.00
Real estate taxes on home
1,938.00
Personal Property taxes
2013 Ford Edge
328.00
1969 Ford Mustang
35.00
Driver’s license for Samson
30.00
Sales tax on auto purchased in February
965.00
Home mortgage interest
3,986.00
Interest on the new vehicle loan
1,460.00
Finance charge, Consumer Charge card
35.00
Finance charge, Overprices Clothes, Inc.
15.00
Contribution toward funeral expenses for Uncle Sam
1,100.00
Contribution to V.E. Glib’s campaign for Governor
150.00
Contribution to Congregation Disciple church
2,400.00
Contribution to American Red Cross
500.00
Contribution to Payne Hospital
100.00
Services of I. M. Sharp, CPA, for computation of last year’s federal income tax
(this is for the personal tax return not related to the business)
345.00
Gymnastics clothing and sweat suits for Samson
450.00
Uniforms and shoes for Delilah
258.00
Samson and Delilah also realized and noted mileage within their personal miles, in addition to the
business miles , that were for: Medical purposes, 100 miles; and for Charity purposes with Payne
Hospital for delivery of Meals on Wheels, 200 miles.
In addition to the federal withholdings in Delilah Form W-2, they quarterly estimated payments on April
15, June 15, September 15, and January 15 of $2,300.00 each quarter for the federal income tax and
$2,000.00 each quarter for state income taxes. The fourth quarter estimated payment for last year’s
taxes paid on January 15 this year: federal income tax payment of $2,000.00 and state income tax
payment of $1,500.00.
Prepare Samson and Delilah’s federal income tax return for this year. Be sure to include all the
necessary forms in the proper sequence and schedules related to their return. If there is a refund,
Samson would like to have it applied to next year’s return.
Upon completion of the return, submit it to your instructor for evaluation.

• 1492742328-Income Tax Project Instructions.pdf

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