Jane Smith, age 40, is single and has no dependents. She is employed as a
legalsecretary by Legal Services, Inc. She owns and operates Typing
Services located nearthe campus of Florida Atlantic University at 1986
Campus Drive, Boca Raton, FL 33434.Jane is a material participant in the
business. She is a cash basis taxpayer. Jane lives at2020 Oakcrest Road,
Boca Raton, FL 33431-Jane’s Social Security number is 123-45-6781. Jane
indicates that she wants to designate $3 to the Presidential
ElectionCampaign Fund. Jane had health insurance for all months of 2018.
During 2018, Janehad the following income and expense items:a. $100,000
salary from Legal Services, Inc.b. $20,000 gross receipts from her typing
services business.c. $700 interest income from Third National Bank.d.
$1,000 Christmas bonus from Legal Services, Inc.e. $60,000 life insurance
proceeds on the death of her sister.f. $5,000 check given to her by her
wealthy aunt.g. $100 won in a bingo game.h. Expenses connected with the
typing service:i. $9,500 interest expense on a home mortgage (paid to San
Jose Savings andLoan).j. $15,000 fair market value of silverware stolen
from her home by a burglar onOctober 12, 2018. Jane had paid $14,000 for
the silverware on July 1, 2008. She wasreimbursed $10,000 by her insurance
company. k. Jane had loaned $2,100 to a friend, Joan Jensen, on June 3,
2014. Joan declaredbankruptcy on August 14, 2018, and was unable to repay
the loan. Assume thatthe loan is a bona fide debt.l. Legal Services, Inc.,
withheld Federal income tax of $15,000 and theappropriate amount of FICA
tax from her wages.m. Alimony of $10,000 received from her former husband,
Ted Smith; divorcewas finalized in 2012, and no changes have been made to
the divorce decree sincethat time.n. Interest income of $800 on City of
Boca Raton bonds.o. Jane made estimated Federal tax payments of $2,000.p.
Sales taxes from the sales tax table of $953.q. Property taxes on her
residence of $3,200.r. Charitable contribution of $2,500 to her alma mater,
Citrus State College.s. On November 1, 2018, Jane was involved in an
automobile accident. At the timeof the accident, Jane’s automobile had an
FMV of $45,000. After the accident, theautomobile’s FMV was $38,000. Jane
acquired the car on May 2, 2017, at a cost of$52,000. Jane’s car was
covered by insurance, but because the policy had a $5,000deduction clause,
Jane decided not to file a claim for the damage.Part 1—Tax
ComputationCompute Jane Smith’s 2018 Federal income tax payable (or refund
due). If you use taxforms for your computations, at a minimum you will need
Form 1040, Schedule 1(Form 1040), and Schedules A, C, and D. Suggested
software: ProConnect Tax Online. Part 2—Tax PlanningIn 2019, Jane plans to
continue her job with Legal Services, Inc. Therefore, items a, d,and l will
recur in 2019. Jane plans to continue her typing services business (refer
toitem b) and expects gross receipts of $34,000. She projects that all
business expenses(refer to item h) will increase by 10%, except for office
rent, which, under the terms ofher lease, will remain the same as in 2018.
Items e, f, g, j, k, and s will not recur in2019. Items c, i, m, n, p, q,
and r will be approximately the same as in 2018.Based on this information,
Jane would like you to provide a tentative computation ofher 2019 taxable
income. Prepare a memo to her tax files that details this computation
Looking for someone to write your essay in 2 hours? We can help. Hire an expert writer to tackle your essay paper and get it done quickly and efficiently. You can also order a custom essay, buy essay online, or get essay help from our team of experienced writers.
