Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 7

Lou and Joann Girardi live in Scottsdale, Arizona, are married, and file a joint return. They recently bought a new home on 21680 Skyline Drive, Scottsdale, AZ 86211. Their 20-year-old son, Stuart, attends the University of Pennsylvania full time and lives at home during the summer. Their SSNs are: Lou, 412-34-5670; Joann, 412-34-5671; and Stuart, 412-34-5672. Their relevant tax information follows:
Lou is an attorney and owns his law firm, which is operating as an S corporation. His W-2 information and Schedule K-1 from his law firm are as follows.
Box 1 = $114,800.50
Box 2 = $ 15,000.14
Box 3 = $102,000.00
Box 4 = $ 6,324.00
Box 5 = $114,800.50
Box 6 = $ 1,664.61
Schedule K-1 from the law offices of Lou Girardi:
Line 1 =$22,582.00
Line 12=$22,582.00
Joann is a full-time lecturer at Arizona State University. Her W-2 information from ASU is as follows:
Box 1 = $65,000.00
Box 2 = $ 9,950.25
Box 3 = $65,000.00
Box 4 = $ 4,030.00
Box 5 = $65,000.00
Box 6 = $ 942.50
The following are other income and expenses they received and incurred during the year:
Prepare the Girardis' federal tax return for 2010. Use Form 1040, Schedules A, B, and E, and a Qualified Dividends Worksheet. Assume that the Girardis do not qualify for any credits (although they may). For any missing information, make reasonable assumptions. (AMT may apply but Form 6251 or the AMT calculation is not required.)