TAX RETURN PROJECT -Spud and Sasha Peery's 2015 taxable income is $87,830

TAX RETURN PROJECT 1: Due Thursday June 16 at the beginning of class
Please fill out the appropriate forms for each problem. Also, for any calculations not made on the
tax forms, please provide your calculations.
1) Spud and Sasha Peery’s 2015 taxable income is $87,830 before considering the effect of their
investment activities. Details of their 2015 sales of investment assets follow:

Ice is Nice Inc.
U.S.A.P. Inc.
Tesla Motors, Inc.

Sale Date
2/19/2015 11/15/2010
4/13/2015 11/1/2014
5/22/2015 5/21/2014

Sales Prices
$ 19,000
$ 5,200
$ 25,670

$ 560
$ 667
$ 1,239

$ 12,840
$ 1,433
$ 25,231

The Form 1099 Spud and Sasha received from their broker indicated total sales of $47,404 (i.e., sales

were reported net of commissions). In addition, on July 19, Spud sells a Josh Hamilton rookie baseball
card for $720. He paid $140 for the card on June 30, 2008.

Spud and Sasha ask you to prepare their 2015 Schedule D. Their 2014 schedule D indicates that they had
a $1,500 net long-term capital loss a $3,500 net short-term capital loss in 2014. Spud’s Social Security

number is 567-22-3495 and Sasha’s is 654-33-8790. Forms and instructions can be downloaded from
the IRS Web site (

2) Christiana Ruiz provides you with the following information regarding her investment income.

Interest Received:
Academy State Bank checking account
NASA Credit Union
City of Reno bonds
Dallas Urban Development bonds


Dividends Received:
General Motors Company
Caterpillar preferred stock
Southeastern Publishing Limited Inc.


In addition, Southeastern Publishing Limited Inc. issued a 5% stock dividend on August 15. Christiana
received 250 dividend shares, which were trading at $3 per share on August 15. Prepare Christina’s

Schedule B. Her Social Security number is 568-33-2541. Forms and instructions can be downloaded
from the IRS Web site (

3) Complete the appropriate portion of each form or schedule indicated in the instructions for each

problem. Lance and Lolo Newton are married and have two children, Josh (15 years old) and Julie (19

years old). Lolo works for Fox Corporation as a drilling superintendent. Lance runs an internet business,
Happy Windbreakers, from their home that provides wardrobe advice. The following basic information
is provided for preparing Lance and Lolo’s 2015 tax return:

1. Lance and Lolo use the cash method of accounting and file their return on a calendar-year basis.
Unless otherwise stated, assume that the Newton’s want to minimize the current year’s tax
2. Lance is 43 years old. Lolo is 53 years old.

3. Lance’s Social Security number is 482-22-2010.
4. Lolo’s Social Security number is 490-32-8090.
5. Josh’s Social Security number is 872-44-2929.

6. Julie’s Social Security number is 798-88-3456.
7. They do not have any foreign bank accounts.

8. Lance and Lolo do not wish to contribute to the presidential election campaign.
9. Their home address is 1432 Highland Street, Reno, Nevada (81252).

Details on their income are below. During 2015, they received the following interest and dividends:

State Bank checking account interest
Reno High district bond interest
Tesla Corporation bond interest
TerraForm Global, Inc. dividends (qualifying)

In addition, they sold the following investments during the year:

Idahoan Foods
WinCo Foods
Micron Technology, Inc.

Sale Date
Sales Prices
2/19/2015 11/15/2010 $
4/13/2015 11/1/2014 $
5/22/2015 5/21/2014 $



560 $
667 $
1,239 $


The Form 1099 Lance and Lolo received from their broker indicated total sales of $47,404 (i.e.,
sales were reported net of commissions) and did not reported investment basis.
Lance’s brother Joey dies in January. Lance receives Joey’s 2011 Corvette (fair market value
$32,000), 2000 shares of G’day Corporation stock (fair market value $2,200), and his brother’s
home (fair market value $108,000) in settlement of the estate.

Lance receives a $350 dividend on the WinCo Foods stock in June. In October, G’day declared a
25% stock dividend when the stock is selling for $0.88. Lance receives 500 additional shares of
stock in November. Lance sells the 500 dividend shares on December 29 for $740.
On December 5, Lance sells Joey’s home for $111,000.

Lolo works for Fox Corporation as a drilling superintendant. Her annual salary is $80,000. In
2015, she receives a $42,000 bonus. Fox withholds $38,650 of her salary and bonus for federal
taxes. Lolo receives the following employment related benefits during 2015:

Fox provides all employees with medical insurance (Lolo’s insurance cost $8,600) and
group-term life insurance at twice their annual salary up to a maximum coverage of
$200,000 (Lolo’s premiums cost $560).

Fox has a qualified pension plan that covers all employees. Under the plan, Fox matches
contributions to the plan up to 6% of the employee’s annual salary. Lolo makes the
maximum allowable contribution, which is matched by Fox.
Lolo pays $2,000 into the company’s flexible benefits plan and spends $2,200 on
medical and dental expenses not covered by insurance. She receives $2,000 from the
flexible benefits plan for these expenses.

Lance is injured when a motorist hits him while he is riding his bicycle. Lance sues the driver
and receives $6,500 for his medical expenses, $1,000 for pain and suffering, and $500 in
punitive damages.

Required: Based on the information provided above, only fill out the appropriate portions of Form 1040
(through the income section), Form 1040 Schedule B, and Form 1040 Schedule D.