CUMULATIVE PROBLEMS

Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax
accountant with
Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer
identification number 11-1111111). She also writes computer software programs for
tax practitioners and has a part-time tax practice. Beth is single and has no
dependents. Beths birthday is July 4, 1972, and her Social Security number is 12345-6789. She wants to contribute $3 to the Presidential Election Campaign Fund.
The following information is shown on Beths 2013 Wage and Tax Statement (Form
W2).
Line Description Amount
1 Wages, tips, other compensation $65,000.00
2 Federal income tax withheld
3 Social Security wages

10,500.00
65,000.00

4 Social Security tax withheld

4,030.00

5 Medicare wages and tips

65,000.00

6 Medicare tax withheld

942.50

15 State
16 State wages, tips, etc.
17 State income tax withheld

Arizona
65,000.00
1,650.00

Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400
from Arizona State Bank. Each financial institution reported the interest income on a
Form 1099INT. She received qualified dividends of $800 from Blue Corporation,
$750 from Green Corporation, and $650 from Orange Corporation. Each corporation
reported Beths dividend payments on a Form 1099DIV.
Beth received a $1,100 income tax refund from the state of Arizona on April 29,
2013. On her 2012 Federal income tax return, she reported total itemized deductions
of $8,200, which included $2,200 of state income tax withheld by her employer.
Fees earned from her part-time tax practice totaled $3,800. She paid $600 to have
the tax returns processed by a computerized tax return service.
On February 8, 2013, Beth bought 500 shares of Gray Corporation common stock
for $17.60 a share. On September 12, Beth sold the stock for $14 a share.
Beth bought a used sport utility vehicle for $6,000 on June 5, 2013. She purchased
the vehicle from her brother-in-law, who was unemployed and was in need of cash.
On
November 2, 2013, she sold the vehicle to a friend for $6,500.
On January 2, 2013, Beth acquired 100 shares of Blue Corporation common stock
for $30 a share. She sold the stock on December 19, 2013, for $55 a share.

During 2013, Beth received royalties of $16,000 on a software program she had
written.
Beth incurred the following expenditures in connection with her software-writing
activities.
Cost of personal computer (100% business use) $7,000
Cost of printer (100% business use) 2,000
Furniture 3,000
Supplies 650
Fee paid to computer consultant 3,500
Beth elected to deduct the maximum portion of the cost of the computer, printer, and
furniture allowed under the provisions of 179. This equipment and furniture was
placed in service on January 15, 2013.
Although her employer suggested that Beth attend a convention on current
developments in corporate taxation, Beth was not reimbursed for the travel expenses
of $1,420 she incurred in attending the conference. The $1,420 included $200 for
meals.
During 2013, Beth paid $300 for prescription medicines and $2,875 in physician and
hospital bills. Medical insurance premiums were paid by her employer. Beth paid real
property taxes of $1,766 on her home. Interest on her home mortgage was $3,845,
and interest paid to credit card companies totaled $320.
Beth contributed $30 each week to her church and $10 each week to the United
Way. Professional dues and subscriptions totaled $350. Beth maintained her sales
tax receipts, showing total purchases of $1,954.
Beth paid $1,000 in estimated Federal income taxes throughout the year.
Part 1Tax Computation
Compute the 2013 net tax payable or refund due for Beth R. Jordan. If you use tax
forms for your solution, you will need Forms 1040, 2106EZ, and 4562 and
Schedules A,
B, C, D, and SE. Suggested software: H&R BLOCK At Home.
Part 2Tax Planning
Beth is anticipating significant changes in her life in 2014, and she has asked you to
estimate her taxable income and tax liability for that year. She just received word that
she has been qualified to adopt a 2-year-old daughter. Beth expects that the
adoption will be finalized in 2014 and that she will incur approximately $2,000 of
adoption expenses. In addition, she expects to incur approximately $3,500 of child
and dependent care expenses relating to the care of her new daughter, which will
enable her to keep her job at Mesa Manufacturing. However, with the additional
demands on her time because of her daughter, she has decided to discontinue her
two part-time jobs (i.e., the part-time tax practice and her software business), and
she will cease making estimated income tax payments. In your computations,
assume that all other income and expenditures will remain at approximately the
same levels as in 2013.