1 Mid-Term Exam PROBLEM 1 Thomas J. (born 5/26/1957) and Catalina I. Adran (born 6/7/1961) are married and live at 22 Arcade Place, Richmond, VA 23240

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Mid-Term ExamMid-Term Exam

PROBLEM 1Thomas J. (born 5/26/1957) and Catalina I. Adran (born 6/7/1961)

are married and live at 22 Arcade Place, Richmond, VA 23240. Tom is a computer programmer and Catalina is a school clerk. They have three children - Peter, Marie, and Martin. Tomand Catalina provided all of the support for their children.

Peter (SSN 091-46-5912, born 5/26/1986) is a full-time college student and worked at a pet store part-time where he earned $4,000. Marie (SSN 233-12-6464, born 2/10/1991) is a full-time high school student and worked at a supermarket earning$3,100. Peter and Marie had no other income. Martin (SSN 131-44-2687, born 7/4/2000) had no income.

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Mid-Term ExamMid-Term ExamThe Adrans filed a joint return in 2007 and had itemized deductions of $11,000. The Adrans filed a joint return in 2007 and had itemized deductions of $11,000.

Their 2007 state income tax deduction was $2,990 and the sales tax deduction Their 2007 state income tax deduction was $2,990 and the sales tax deduction they could have taken was $657. In 2008, the Adrans paid the following they could have taken was $657. In 2008, the Adrans paid the following expenses:expenses:

Dental bills $ 415Real estate taxes $1,850Medical bills $ 825 State balance due for 2006 return paid in 2008 $ 225Hearing aid (Marie) $ 225Goodwill contribution (clothing FMV) $ 180Toothpaste and other toiletries $ 115Athletic club membership $ 650Family health insurance $1,550Church donations (no single amount over $250) $ 580Prescription drugs $ 195 Personal property taxes $ 405Back brace (Peter) $ 185Neighborhood civic league $ 20

Prepare the Adran’s return for 2008.

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PROBLEM 2Tracy B. Good (born 4/8/1970) pays all the costs of keeping up a home

located at 211 Laguna Lane, San Jose, CA 95113 for herself and her daughter Ellen T. Good (SSN 399-88-7777, born 5/12/1992). Tracy and her husband Rod were divorced in 2003 and Tracy signed an agreement allowing Rod to claim the exemption for Ellen. Ellen spends three months of the year with her father.

In March of 2008, Tracy’s nephew, Stanley Good (SSN 421-12-2121, born12/7/1995), came to live with her. She provided all of his support.

Tracy is a clerk in a jewelry store. She also earns extra money as a waitress. In 2008, Tracy reported tips to her employer as required. Her tip record showed she also received $52 (not more than $19 in any month) in tips she was not required to report to her employer.

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In 2008, Tracy received alimony payments of $300 per month from Rod. Rod also pays Tracy $200 per month child support payments for Ellen.

Tracy received a state refund of $250 on her 2007 state return. She did not itemize deductions in 2007.

Prepare a 2008 tax return for Tracy.

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PROBLEM 3

Caroline F. (born 2/09/1958) and Roger A. Buckley (born 11/10/1957) are married and both work full time. Caroline is an attorney and Roger is a bookkeeper. Caroline’s father, Conrad Nagle (SSN 012-99-4523, born 04/03/1934), lives with them and they provide most of his support. Conrad’s only income in 2008 was $3,600 from a pension and $6,000 in social security benefits.

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They have two children who lived with them all year and they provide all of their support. Their son Albert (SSN 263-36-9090, born 12/10/1982) is severely disabled and cannot work or care for himself. When Roger and Caroline are at work, Albert receives care from Helping Hands (EIN 34-3356793), 45 Larch St., Greensboro, NC 27401. In 2008, they paid $5,875 for Albert’s care. In 2008, the Buckley’s also paid $2,890 for after school care for their daughter Lily (SSN 263-19-4505, born 8/4/2003) so they could work. Lilly stayed with a neighbor, Anne Richards (SSN 346-82-4400), 1474 Parker Avenue, Greensboro, NC 27401.

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Roger donated $200 per month to the United Way through a payroll deduction plan.

Their itemized deductions for 2007 were $17,470 and they filed a joint return. Their 2007 state income tax deduction was $6,190 and the sales tax deduction they could have taken was $1,475.

In addition to the W-2 forms and 1099 forms provided, Roger also won the Jackpot Lottery for $800. His lottery and bingo losses were $500.

Prepare the Buckley’s 2008 tax return.

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Documents

1 Mid-Term Exam PROBLEM 1 Thomas J. (born 5/26/1957) and Catalina I. Adran (born 6/7/1961) are married and live at 22 Arcade Place, Richmond, VA 23240