Personal and Business Taxation

ACCT 2690 – Capstone Accounting – Personal and Business Taxation

Complete the following project using the knowledge you attained in ACCT 1610 Personal Income Tax
and ACCT 2610 Business Income Tax. You are going to manually prepare the federal tax return for
Samson and Delilah Athena. You will be expected to complete the entire return with the necessary
current tax forms located in the Taxation file in Canvas. Although Samson does not believe his tax
return will be unduly complicate, he does realize his limitations and came to you for your assistance. The
accountant who helped him last year retired. You are to prepare his income tax return for the 2019 tax
year in good form. Be sure they are assembled in the correct numeric order, the same as you would
submit them to the IRS.

Samson, a world renowned strong man and athlete, is employed as an owner and a trainer for his
business “FeelFit Health Club”. To some people, he is just another long-haired strong man living a life of
earlier eras. Delilah, his vivacious wife, is also not your stereo-typical “blonde”. She also happens to be
employed as a barber and hairstyling consultant at “Abraham’s Hairstyling Salon”.

Samson and Delilah Athena live with their family at 3234 Elaine Way, Hastings, NE 68901. Samson’s
social security number is 776-47-1314, while Delilah’s is 749-11-1924. Their land line telephone number
is 402-462-4976. Both are in their mid- forties and enjoy good health. Both have excellent eyesight,
although Samson has occasionally complained of blackouts when Delilah cuts his hair.

Samson, born July 1, 45 years ago, and Delilah, born April 15, 43 years ago, have been married 25 years
and have always lived in Nebraska. In the past, they always filed their tax returns as married filing
jointly. They plan to continue to file the same this year. Also, to aid in the preparation of the return, the
couple has provided a copy of last year’s 2018 tax return.

Samson and Delilah have four children: Cain, born January 1, age nineteen, social security number 222-
28-1105 Abel, born February 10, age seventeen, social security number 611-31-1305; and Seth, born July
4, age eight, social security number 650-82-6805. The couple also welcomed into their home a baby boy
on June 8. Joseph’s social security number is 729-14-3205.

Cain graduated from Hastings High School in May this year and started his freshman year at the
University of Nebraska at Kearney, 2504 9th Ave, Kearney, NE 68849 in August. He earned $3,100 on a
summer job, which he deposited in a savings account and did not use it for his support. Samson sent
Cain $400 per month (August through December) so that Cain would not have to use his personal
savings for living expenses. Samson and Delilah also helped pay for his tuition, fees, books, board and
room, and purchased some of his clothes. Cain’s tuition and fees totaled $32,530, books were $3,300
and board and room was $26,000 for the fall semester and received a Form 1098-T from the University.
Cain received a $13,000 scholarship. The school’s Federal ID is 37-3001497.

Abel is proving to be a very serious student with high academic standards already set in High School.
Little Seth just started 2nd grade this fall and has already decided that he is going to follow in his father’s
footsteps as a strong man and take over his dad’s business when he retires.

Since Samson solely owns and works full-time at the FeelFit Health Club at 1372 Noah Ave., Hastings.
He submitted the business records for the club for you to use this year. He began this business on
February 10, four years ago. The EIN number for the business is 47-2309660 and the business code for

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his health club is 812990. Since he provides only a service, he uses the cash basis method of keeping his
books. He believes he has given you everything you need to complete the business portion on the
return. He felt there was nothing required a filing of Form 1099-Misc.

Business information submitted by Samson:
Revenue:
General Membership Fees $197,000
Private Trainer Fees 122,000
Expenses:
Advertising 22,000
Car, Truck, miles, expense ?
Depreciation ?
Insurance (Health Insurance is made available
to all full-time employees but no
premiums are paid by the company)
On the building 5,200
On the equipment 3,900
Liability 14,000
Interest related to building mortgage 13,500
Last year’s business portion of
accounting and tax work 750
Office expenses 5,200
Repairs and Maintenance:
Painted wall 1,145
Exercise Equipment repairs 585
Bathroom plumbing repairs 985
Broken lights 950
Supplies 1,350
Taxes:
Real property 3,900
Personal property (equip.) 1,345
Payroll taxes 10,342
Travel ?
Utilities:
Telephone 3,200
Electricity 4,260
Garbage 770
Water and Sanitation 810
Natural gas 3,150
Wages:
One full-time office assistant 54,000
6 part-time workers 69,500

Samson also included a list of the equipment and furniture in the business that needs to be depreciated.
He has always had the accountant use the MACRS method for figuring the depreciation and wishes the
same thing for this year. He has also never taken advantage of the bonus year depreciation nor the
Section 179 expensing of any of his previous purchases and does not wish to this year either. All
purchases made by Samson were new purchases with no trade-ins.

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Assets in Business Purchase Date Price Paid
Building February 10, 2015 $383,000
(Cost of land included in the price is $63,000)
Office Equipment:
Desk February 10, 2015 900
Chairs June 1, 2017 1,400
Computer & Printer August 25, 2017 2,200
File Cabinets July 1, 2018 650
Storage credenza February 10, 2015 710
Workout and Training Equipment:
Elliptical machines February 10, 2015 4,300
June 15, 2017 4,200
Treadmills February 10, 2015 5,200
Stationary bikes February 10, 2015 2,200
April 26, 2019 890
Weight machines September 1, 2016 4,900
Items for the weight and training room:
Rubber floor mats August 1, 2016 1,800
Storage weight racks February 10, 2015 850


There are no vehicles dedicated to the business because Samson does not do that much transportation
or travel-related business. However, he did some traveling this year to promote the health club and
entertain customers. He drove is personal car and kept records of his business-related miles only. The
business mileage totaled 6,500 miles this year. He did not keep records of the gas used or repairs made
because his total miles driven with the vehicle this year was 23,200 miles (which includes the 6,500
business miles). These miles were all personal or commuting miles except the miles for business
identified earlier. Five of the business trips required him to stay two to three days at a specific location.
He incurred $1,800 in lodging and $1,050 in meals. He did not incur any parking fees nor toll fees on his
travels. Samson drives a 2019 Ford Edge that was purchased new on January 2, 2019. No other vehicle
was traded in at the time of the purchase. However, being so busy with keeping his muscles well-tuned,
he did not have time to keep track of the motor vehicles costs.

Delilah began work in February two years ago for a barber in Hastings—Abraham’s Haircutting, 1692 Spa
Street, Hastings, EIN No. 47-1975331. Her Form W-2 for the year included the following:
Wages, tips, and other compensations $53,200
Total Social Security and Medicare wages 57,000
Social Security tax withheld 3,534
Medicare tax withheld 827
Federal Income tax withheld 6,320
State income tax withheld 980

In addition to their earnings, Samson received the following amounts on Form 1099s for dividends and
nonemployee compensation:
Dividends on Apple stock (ordinary and qualified) $380
Dividends on Chevrolet stock (ordinary and qualified) 580
Interest on savings in Employee Federal Credit Union 120

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Samson had modeling fees for Camel Power drink advertising 1,330

Samson sold three sets of stock this year and received a Form 1099-B from Ameritrade for each of these
sales. The 1099-B indicated that the basis was not reported to the IRS.

100 shares of BK’s Burgers stock—sold on April 1 this year for $132 a share. They were
purchased for $100 a share on December 20 two years ago.
135 shares of Lights Bright stock—sold on November 23 this year for $99 a share. They were
purchased for $104 a share on March 10 five years ago.
62 shares of Slim Look stock—sold on March 14 this year for $121 a share. They were
purchased for $59 a share on May 20 last year.

Samson and Delilah received Form 1099s for interest earned from:
First National Bank savings account 260
First Federal Security investments 1,100
(They cashed a CD early at First Federal Security, receiving a penalty of $118.00.)
U.S. Government bonds 210

Samson and Delilah did not the sell the home they purchased on January 1, 25 years ago, when they
were first married. They converted it to a rental home 10 years ago. When they completed the
conversion, the home had a fair market value of $157,000 while they originally paid $65,000 on the
home 25 years ago. The land had a $16,000 value 25 years ago and has a fair market value at the time
of conversion of $42,000 today. The house is located at 528 E. Hardy Lane, Hastings, NE 68901. During
the current year, Samson and Delilah received $1,400 a month for each of the twelve months this year
in rental income from the tenants and paid the following expenses:
Management Fees $ 580
Insurance 1,340
Mortgage interest 1,025
Real estate taxes 2,528
Repairs 280
Utilities 1,600
Depreciation on home ?

Joseph, being so young, required daycare while Delilah worked. Delilah as fortunate enough to have
found Babylonian Care Center, 7192 Avenue H, Hastings, NE 68901, employee ID number 47-5126790.
Joseph has enjoyed being there since August 1. The total daycare costs were $3,080 for the year.

Samson and Delilah believe they might be able to itemize their deductions and gave you a list of the
items they paid by check, among other things, this year:
Medicine and drugs from prescriptions $267
Vitamins and mineral supplements 65
Doctor expenses 560
Dentist expenses 340
Glasses for Samson (after all, he is past 40) 720
Bottled water 75
Hospital costs for Abel’s appendectomy 980
(The above amounts are what the insurance company did not pay in each situation.)
Personal automobiles’ insurance 1,533

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Real estate taxes on home 3,225
Personal Property taxes
2016 Ford Edge 612
1969 Ford Mustang 45
Driver’s license for Samson 30
Sales tax on Ford Mustang 2,200
Home mortgage interest 7,420
Interest on the new vehicle loan 1,560
Finance charge, Consumer Charge card 35
Finance charge, Overprices Clothes, Inc. 15
Contribution toward funeral expenses for Uncle Sam 1,200
Contribution to V.E. Glib’s campaign for Governor 150
Contribution to Congregation Disciple church 6,600
Contribution to American Red Cross 850
Contribution to Payne Hospital 98
Services of I. M. Sharp, CPA, for computation of last year’s federal income tax
(this is for the personal tax return not related to the business) 320
Gymnastics clothing and sweat suits for Samson 550
Uniforms and shoes for Delilah, only used for work 302

Samson and Delilah also realized and noted mileage within their personal miles, in addition to the
business miles, that were for: Medical purposes, 145 miles; and for Charity purposes with Payne
Hospital for delivery of Meals on Wheels, 600 miles.

Samson and Delilah took a trip to the casinos to celebrate their anniversary. Delilah won $4,200 playing
the slots. Samson, being a great business man, kept all his receipts and costs of gambling. They spent
$5,300 over the year on lottery tickets and playing the slots.

In addition to the federal withholdings in Delilah Form W-2, they quarterly estimated payments on April
15, June 15, September 15, and January 15 of $5,350 each quarter for the federal income tax and $1,750
each quarter for state income taxes. The fourth quarter estimated payment for last year’s taxes paid on
January 15 this year: federal income tax payment of $2,800 and state income tax payment of $2,100.

Prepare Samson and Delilah’s federal income tax return for this year. Be sure to include all the
necessary forms in the proper sequence and schedules related to their return. If there is a refund,
Samson would like to have it applied to next year’s return.

I need help with forms 1040, schedule 1-3, schedule a, b, c, d, e, se, also with forms 2441, 4562, 8863, 8949, and 8995 for the year of 2019.