Posted: October 20th, 2022

income tax return forms for Carlos and Maria Gomez for the 2013 tax year-Schedule C and Schedule SE.

Instructions:

Please complete the
required federal individual income tax return forms for Carlos
and Maria Gomez for the 2013 tax year. Ignore the requirement to attach the
Form(s) W-2 to the front page of the Form 1040. If required information is
missing, use reasonable assumptions to fill in the gaps.

Carlos and Maria
Gomez live in Lubbock, Texas. The Gomezes have two children: Luis (age 14) and
Amanda (age 12). Both children qualify as federal income tax dependents of
Carlos and Maria. The Gomezes provided the following information:

•
Luis’s social
security number is 589-24-8432
•
Amanda’s
social security number is 599-74-8733
•
The Gomez’s
current mailing address is 543 West La Patera, Lubbock, Texas 79401

Carlos is a civil engineer. For the first two
months of the year, he was employed by West Texas Engineering (WTE). However,
he resigned his position with WTE to start his own engineering firm called
Gomez Professional Engineers (GPE). GPE is conducted as a sole proprietorship
with Carlos being the sole owner. GPE started business on January 1, 2013 and
is located at 1515 West Industrial Road Lubbock, Texas 79401 (EIN 20-1616167).
Maria works for herself as a part-time bookkeeper.

Carlos provided the following W-2 from WTE.
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Carlos reported the
following information for GPE’s business activities (GPE uses the cash method
of accounting):

Revenues:

Credit card receipts

$352,000

Cash receipts

648,000

Total revenue

$1,000,000

Expenses:

Advertising

$5,450

Insurance-professional

15,750

Office building rent

62,000

Equipment leases

6,050

Travel

14,200

Meals and entertainment

2,975

Wages

498,725

Taxes and licenses

44,875

Employee health insurance

42,000

Employee benefit programs

14,500

Utilities

37,425

Office supplies

18,900

Legal and professional fees

15,550

Repairs and maintenance

10,000

Total Expenses

$ 788,400

GPE purchased and placed in service the following fixed assets:

Item

Date
Purchased

Amount

Laptop computers

March 1

$20,500

Printers

June 1

$6,500

Office furniture

October 10

$19,000

GPE does not want to claim any bonus depreciation or Section 179
expensing on any of these assets.

Carlos worked part-time on GPE business
activities until he finished his employment with WTE early in the year. Carlos
worked full-time on GPE business activities for the rest of the year.

GPE filed Forms 1099 for payments made to contractors when required to
do so.

Carlos and Maria paid $22,000 for health
insurance for his family (for the time he was working at GPE). This amount is
not included in the totals for GPE above. Neither Carlos nor Maria had access
to employer-provided health insurance during the year while they were paying
the premiums for this policy.

In need of cash, in February, Carlos withdrew
$20,000 from his 401(k) account. He received the following Form 1099-R:

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In addition, Carlos
has established a SEP-IRA retirement plan using his business earnings from
GPE.. He would like to make the maximum contribution possible to this plan for
the 2013 tax year. Assume that you will file this tax return by April 15 of
2014 and Carlos will be able to fund the SEP IRA with the full amount allowable
by the date he files the return.

Maria received the following Form 1099-Misc from
her bookkeeping activities for her largest client:
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Maria received an
additional $4,000 from clients who were not required to issue Maria a Form
1099.

During the tax year, Maria paid the following
business-related expenses:

?

Paper

$365

?

Toner

$450

?

Meals

$580

On March 1, 2013 Maria purchased a new laptop
computer for her business at a cost of $1,850. Maria also purchased a new laser
printer/photocopier combination at a cost of $840 on the same date. In April,
Maria purchased computer software to use in her business for $400. Maria would
like to recover the cost of these assets as soon as possible.

Maria owns a 2011
Acura. She started to use the Acura for her business on January 1, 2012. She
drove 2,050 business miles during 2013 (she has documentation to verify). She
drove the vehicle for a total of 10,000 miles during the year (7,950 personal
miles). She also has access to another vehicle that she can use for personal
purposes.

Maria started her bookkeeping service in 2010 and
she uses the cash method of accounting. She is the only person performing
services in the business. She did not make any payments that would have
required her to file a Form 1099.

On January 3, 2013, the Gomezes sold their prior
principal residence. They purchased that residence in 2008 and had lived there
full-time until they sold it this year. They originally purchased the home for
$310,000. The Gomez family has never claimed any tax depreciation (nor were
they allowed to) on the home in any tax year. The sales price of the home was
$405,000. The home is located at 45 East Entrada Trail, Lubbock Texas 79401.

The Gomez family
purchased (and moved into) their current residence at 543 West La Patera,
Lubbock, Texas 79401 in late January of 2013. The La Patera residence is 2,000
square feet. The purchase price of the residence was $500,000 (building value
was $350,000 and the lot value was $150,000). The mortgage on the purchase was
$300,000. Expenses relating to the La Patera residence were as follows:
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Property taxes

$10,750

Utilities

$3,000

Insurance

$2,000

In addition to the
primary mortgage on the home, the Gomezes borrowed $150,000 on a home equity
line of credit (“HELOC”) against the La Patera home. They received the
following Form 1098 relating to the line of credit:
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They used the funds from the line of credit
borrowed funds to pay off personal debts on credit cards, take a European
vacation, and to purchase two new personal vehicles.

Maria utilized a room in the La Patera home for
her bookkeeping business. The room was used exclusively on a regular basis as
the principal place of business for Maria’s business. Maria wants to maximize
her home office deduction related to this use. The room she uses is 200 square
feet.

In the summer of
2013, the Gomez family rented out the La Patera residence to another family.
The La Patera residence is situated along the ninth green of the famous Lubbock
Country Club (LCC). The LCC hosted the U.S. Senior Open golf tournament this
year. The Gomez family rented their residence to a golfer participating in the
event for $1,000 per day for 10 days (the home office remained locked and off
limits to the renters, however). During this time the Gomez family went on
vacation touring the west coast of the United States. The Gomez family incurred
$1,500 of cleaning and other expenses associated with the 10-day rental period.

Maria owns 20 acres of vacant ground within the
city limits of Lubbock. Maria acquired the land as a gift from her parents on
July 1, 2006. The land was valued at $4,000 per acre on the date of the gift.
Her parents purchased the land in 1990 at a price of $500 per acre. Maria has
held this land as an investment since she received it. On September 15, 2013
Maria exchanged this land with a development company that plans to develop the
20 acres (Maria and the development company are not related). In exchange for
the 20 acres, Maria received a condominium in Lubbock that was valued at
$160,000. For purposes of depreciation, the building is valued at $120,000 and
the land is valued at $40,000. The condominium is located at 990 El Mar, Unit
A, Lubbock Texas 79401.

Maria first
rented out the El Mar unit on October 1, 2013. The revenue and expenses from
the rental unit from October through December is as follows:

Rental revenue

$3,600

HOA fee expense

$300

Property taxes paid

$225

Utilities expense

$350

No Form(s) 1099 were required to be filed for
this rental.

The Gomezes also received the following Forms
1099 for the year:
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The Grand Junction City bond was issued in 2008.
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The Lubbock Texas School District bond
was issued in 2011.
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The Gomezes did not own, control, or manage any
foreign bank accounts nor were they a grantor or beneficiary of a foreign trust
during the tax year.

The Gomezes paid the following expenses during
the year (in addition to the personal residence-related items listed above):

Dentist (unreimbursed by insurance)

$

500

Doctors (unreimbursed by insurance)

$

1,750

Prescriptions (unreimbursed by insurance)

$

425

Vehicle property tax based upon value

$

950

Contribution to qualified charities

$

3,500

The Gomezes did not pay any state individual
income taxes during the year.

Other Information

The Gomezes made federal estimated tax payments
related to the 2013 tax year as follows during the current year:

April 15, 2013

$11,000

June 15

$11,000

September 15

$11,000

January 15, 2014

$11,000

The Gomezes want to
contribute to the Presidential Election Campaign. The Gomezes would like to
receive a refund (if any) of tax they may have overpaid for the year. Their
preferred method of receiving the refund is by check.

Order | Check Discount

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