Noah and Joan Arc live with their family in Dayton, OH. Noah’s Social Security number is 434-11-3311. Noah was born on February 22, 1989, and Joan was born on July 1, 1990

Comprehensive Problem 1 – Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B

Noah and Joan Arc’s Tax Return

Noah and Joan Arc live with their family in Dayton, OH. Noah’s Social Security number is 434-11-3311. Noah was born on February 22, 1989, and Joan was born on July 1, 1990. Both enjoy good health and eyesight. Noah owns and operates a pet store, and Joan is a firefighter for the city of Dayton.

1. The Arcs have two children, a son named Shem (Social Security number 598-01-2345), born on March 21, 2017, and a daughter named Rayder (Social Security number 554-33-2411), born on December 3, 2020.

2. Joan and Noah brought a folder of tax documents (see Forms W-2 and 1098). In addition, they received a Substitute 1099 Statement from Charlotte Shaws Financial Services (located on a separate tab) regarding their stock transactions for the year.

3. Noah’s pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is ‘‘The Arc’’ and its taxpayer identification number is 95-9876556. Since you handle Noah’s bookkeeping, you have printed the income statement from your QuickBooks software, shown in the table below.

4. Details of The Arc’s meals and entertainment:

5. Travel costs represent airfare ($500) and lodging ($200 per night) for Noah’s attendance at the Global Pet Expo in Las Vegas, NV. Noah spent two days attending the largest retail pet store conference and three days gambling and attending concerts and shows.

6. Miscellaneous expense is a $300 fine paid to the City of Dayton for failure to post a valid business license.

7. Noah and Joan paid the following amounts during the year (all by check):

8. Noah has a long-term capital loss carryover from last year of $990.

9. Noah and Joan own a condo and use it as a rental property. The condo is located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. Noah provides the management services for the rental, including selection of tenants, maintenance, repairs, rent collection, and other services as needed. On average, Noah spends about two hours per week on the rental activity. The revenue and expenses for the year are as follows:

Rental income includes $1,200 per month for two months under the previous lease (which ended February 28, 2024). The new lease is $1,350 per month for 10 months under the new lease but the tenant paid only $750 in May 2024 because the tenant paid $600 for repairs to the apartment, and with the Arc’s permission, reduced May’s rent by $600. The new lease also required the tenant to pay last month’s $1,350 rent in February 2024. The home was acquired for $100,000 in 2008. On May 12, 2024, the Arcs installed new fixtures (7-year recovery period) at a cost of $4,750. They wish to maximize the cost recovery on the new fixtures but make no elections.

10. The Arcs paid Ohio general sales tax of $1,202 during the year.

Required:
You are to prepare the Arcs’ federal income tax return in good form. You are not to complete an Ohio state income tax return. The following forms and schedules are required and may be found in parts 1, 2, or 3:

a Employee’s social security number 456-87-5432 OMB No. 1545-0008 Safe, accurate, FAST! Use IRS e ~ file Visit the IRS website at www.irs.gov/efile. b Employer identification number (EIN) 33-4382966 1 Wages, tips, other compensation 33,100.00 2 Federal income tax withheld 5,341.34 c Employer’s name, address, and ZIP code City of Dayton Fire and Rescue 123 Warren Street Dayton, OH 45402 3 Social security wages 33,100.00 4 Social security tax withheld 2,052.20 5 Medicare wages and tips 33,100.00 6 Medicare tax withheld 479.95 7 Social security tips 8 Allocated tips d Control number 9 10 Dependent care benefits e Employee’s first name and initial Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 C o d e DD 10,034.11 Joan Arc 1265 W. Riverview Avenue Dayton, OH 45402 13 Statutory employee Retirement plan Third-party sick pay ☐ ☒ ☐ 12b C o d e 14 Other 12c C o d e 12d C o d e f Employee’s address and ZIP code 15 State Employer’s state ID number 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name OH 1126-87021 33,100.00 2,100.00 33,100.00 855.00 DAYTN Form W-2 Wage and Tax Statement 2024 Department of the Treasury—Internal Revenue Service Copy B—To Be Filed With Employee’s FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service.

CORRECTED (if checked) RECIPIENT’S/LENDER’S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. Japheth National Bank 3708 N Main Street Dayton, OH 45405 *Caution: The amount shown may not be fully deductible by you. Limits based on the loan amount and the cost and value of the secured property may apply. Also, you may only deduct interest to the extent it was incurred by you, actually paid by you, and not reimbursed by another person. OMB No. 1545-1380 Form 1098 (Rev. January 2022) Mortgage Interest Statement For calendar year 20 24 1 Mortgage interest received from payer(s)/borrower(s)* $ 10,011.22 Copy B For Payer/ BorrowerThe information in boxes 1 through 9 and 11 is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points, reported in boxes 1 and 6; or because you didn’t report the refund of interest (box 4); or because you claimed a nondeductible item. RECIPIENT’S/LENDER’S TIN 13-4296127 PAYER’S/BORROWER’S TIN 434-11-3311 2 Outstanding mortgage principal $287,245.66 3 Mortgage origination date 03/13/2015 4 Refund of overpaid interest $ 5 Mortgage insurance premiums $ PAYER’S/BORROWER’S name Noah and Joan Arc 6 Points paid on purchase of principal residence $ Street address (including apt. no.) 1265 W. Riverview Avenue  7 ☒ If address of property securing mortgage is the same as PAYER’S/BORROWER’S address, the box is checked, or the address or description is entered in box 8. City or town, state or province, country, and ZIP or foreign postal code Dayton, OH 45402 8 Address or description of property securing mortgage 9 Number of properties securing the mortgage 1 10 Other 11 Mortgage acquisition date Account number (see instructions) Form 1098 (Rev. 1-2022) (Keep for your records) www.irs.gov/Form1098 Department of the Treasury – Internal Revenue Service

Indiana James Financial Services 123 Wall Street New York, NY 10005 Joan and Noah Arc 1265 W. Riverview Avenue Dayton, OH 45402 SSN: 456-87-5432 Date December 31, 2024 Dividends Payor Box 1a Ordinary Dividends Box 1b Qualified Dividends Box 2a Cap Gain Distrib Box 4 Federal Income Tax withheld Box 5 Sec 199A Dividends Box 7 Foreign Tax Paid Bellok Industries   310.00   310.00 0.00 0.00 0.00 0.00 Ravenwood Util. 1,200.00 1,200.00 0.00 0.00 0.00 0.00 Sala Growth Fund   580.00   380.00 275.00 0.00 100.00 30.00 Stock Transactions Box 1a Box 1b Box 1c Box 1d Box 1e Box 2 Description Date Acq. Date Sold Net Proceeds Basis (reported to IRS) Character 100 shs. Markus Corp. 02/11/2014 08/15/2024 4,750.00 2,600.00 LT 50 shs. Tote Corp. 01/13/2024 06/05/2024 6,075.00 5,600.00 ST 25 shs. Redgie Co. 10/02/2015 10/07/2024 11,400.00 2,050.00 LT

 

ROUNDUP DAY CARE CENTER 555 W THIRD STREET DAYTON, OH 45402

January 12, 2025

Joan and Noah Arc 1265 W. Riverview Avenue Dayton, OH 45402

Dear Joan and Noah,

Thank you for a great 2024 at Roundup! We appreciate your patronage during the year and hope to continue to provide excellent service for Rayder in 2025. We have provided the tax information for calendar year 2024 below. Please let us know if you need any additional information.

Sincerely,

Charles F. Antedeluvian Executive Director, Roundup Day Care EIN 54-0983456

Date of service Amount Paid Child January 1, 2024 – December 31, 2024 $7,500.00 Rayder Arc

• Click here to access the tax table to use for this problem.
• Neither taxpayer wants to make a contribution to the presidential election campaign.
• The taxpayers elect to use the foreign tax credit in lieu of the deduction.
• Enter all amounts as positive numbers, except for a “loss.” If required, enter a “loss” as a negative number on the tax form.
• If an amount box does not require an entry or the answer is zero, enter “0”.
• If required, round your answers to the nearest dollar. On Schedule SE, use the rounded amounts in subsequent computations.
• If the computations result in a refund, the taxpayers would like to receive the funds rather than applying to the next year.
• Make realistic assumptions about any missing data that you may need.