Tax Return for Jake Wells

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  • Topic: Taxation in the United States, Roth IRA, Shanghai Metro
  • Pages : 3 (788 words )
  • Download(s) : 10
  • Published : February 25, 2013
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2012 Tax Return and Issues Memo Prepared For:
Jack Wells

Issues and Questions for Jack Wells’ 2012 Tax Return
As preparers for Mr. Wells’ 2012 Tax Return our team made several assumptions, some of which would require further input from Mr. Wells. We also ran into some opportunities for tax planning for Jack. This memo outlines those assumptions, questions, and opportunities. The following is a list of assumptions broken down by IRS Form or Schedule: Schedule C

Part I
For Line 1 our group made the assumption that the $2,912,909 amount Jack listed in the client questionnaire included the $11,616 credit he gave his customers from interest earned on deposits held in escrow. For Line 6 we determined the interest that he should report amounted to $7245. We calculated this amount from the $18,861 that he reported in the client questionnaire minus the amount of $11,616 that was earned on customer deposits held in escrow. To confirm this amount we would like to see who the recipient was of the 1099-INT for the account and the amount reported. Part II

For Line 9 we made the assumption that Jack elected the actual expense method for business vehicle use when he first used the vehicle for business. We based this assumption on the S.A.L.Y. premise. For Line 17 we made the assumption that the amount doesn’t include any settlements paid to plaintiffs. The amount represented fees Jack paid on behalf of his business. For Line 24b we assumed the Trial Balance amounts of $15,000 and $6886 represented the business use portion of these items. As such we expensed 50% of those amounts. Part IV

For Line 44 we assumed that last year’s mileage was split 80% to business use and 20% to personal use. We used those allocations for 2012 as well and assumed S.A.L.Y. Form 8829
For Line 10 we assumed the house mortgage was less than or equal to $1,000,000. For Line 17 we did not get an exact figure from Jack for 2012. As such we used S.A.L.Y. For Line 20 we based our...
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