Expert Work - Laurie and Lynn Norris

Expert Work - Laurie and Lynn Norris

This is the second part of a six part problem that will allow you to prepare the 2015 tax return for Laurie and Lynn Norris. As with the previous parts, this part of the problem will ask you to prepare a portion of their tax return. You should complete the appropriate portion of each form or schedule indicated in the instructions. The following basic information is provided for preparing their 2015 tax return:

Lynn’s brother Joey dies in January. Lynn receives Joey’s 2012 Corvette (fair market value $32,000), 200 shares of Goober Corporation stock (fair market value $2,000), and his brothers home (fair market value $125,000) in settlement of the estate. Lynn receives a $100 dividend on the Goober stock in June. In October, Goober declared a 25% stock dividend when the stock is selling for $15. Lynn receives 50 additional shares of stock in November. Lynn sells the 50 dividend shares on December 10 for $700.On December 22, Lynn sells Joey’s home for $128,000.Laurie works for Fox Corporation as a drilling superintendent. Her annual salary is $96,000. In 2015, she receives a $12,000 bonus. Fox withholds $16,200 of her salary and bonus for federal taxes. Laurie receives the following employment related benefits during 2015: Fox provides all employees with medical insurance (Laurie’s insurance cost $8,600) and group-term life insurance at twice their annual salary up to a maximum coverage of $200,000 (Laurie’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 5% of the employee’s annual salary. Laurie makes the maximum allowable contribution, which is matched by Fox. Laurie pays $2,000 into the company’s flexible benefits plan. Laurie spends $2,200 on medical and dental expenses not covered by insurance. She receives $2,000 from the flexible benefits plan for these expenses. Lynn is injured when a motorist hits him while he is riding his bicycle. Lynn sues the driver and receives $3,500 for his medical expenses, $2,000 for pain and suffering, and $1,000 in punitive damages. Required: Based on the information provided above, only fill out the appropriate portions of Form 1040, Form 1040 Schedule B, and Form 1040 Schedule D.

 
Reg and Rhonda are married and have 2 children, ages 5 and 3. Rhonda has not worked outside the home since the birth of their first child. Now that the children are older, she would like to return to work and has a job offer that would pay her $27,000 per year. For her to take the job, the children will have to be put into a day-care center. The day-care center will cost $500 per month. Given the high cost of the day-care center, Reg and Rhonda are wondering whether it is worth it for Rhonda to take the job. They project their current-year taxable income (without considering Rhonda’s job) as $50,000. Write a letter to Rhonda explaining how much additional cash (after taxes) she will earn if she accepts the job. You should include in your letter the nontax factors Rhonda should consider before taking the job.

 
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