I need help solving these problems.

I also need help knowing where to enter the results on the 1040 tax form. I know I will probably need Schedules a, b, c, & d. I am very grateful for the help!

You don't need B or D. B is for interest and dividends, and D is for capital gains. You have neither, in these problems. Sch A will be required only to carry over the appropriate amounts from the 8829. The mortgage interest and real estate taxes would be the only 2 fields used on Sch. A. The excess of the mortgage interest and real estate taxes would go on Sch A, which flow from the 8829.

1. Trained as a mining engineer, David has developed considerable expertise in the treatment and disposition of waste material. He also is well versed in the various Federal and state requirements for land reclamation projects. David maintains a consulting practice through which he renders advice on these matters. Most of his clients are small and medium-sized mine owners and operators located in Wyoming and contiguous states (Montana, Idaho, Utah). Charateristically, David is retained by a client on a contract fee basis and is reimbursed for all out-of-pocket expenses. In performing his services, David usually visits the job location and later submits his recommendations in a written report along with a statement for his services and expenses. David was paid the following amounts relating to the consulting practice in 2008: You can download a 2008 tax return and all applicable forms from the IRS website and save the data you type into them.

Fees for services rendered Expense reimbursement-

$92,800 This goes in gross receipts on Schedule C.

Airfare $8,200 The expenses go on schedule C under each appropriate category. You would then minus out the amount reimbursed. It would look like this: airfare 8200 less reimbursed (8200) so it would total to 0. Lodging Meals Transportation 5,200 6,100 920 20,420 $113,220

2. NOT INCLUDED in the business transactions listed under item 1 above are the following:

y Payment from Ibis Mining received in January 2008 For work performed in December 2007 $4,400 Add this on Sch C to gross income. y Payment from Anhinga Mining received in January 2009 for work performed in This is irrelevant since it was received in 2009 December 2008 $5,100 y Nonpayment by Cormorant Mining for work This is taken off in gross receipts on Sch. C. performed in March 2008 $3,700 David did not incur travel expenses in any of these engagements (the work was in his office). As Cormorant Mining is bankruptcy, David does not expect to collect any of this fee.

3. Other expenses paid by David in 2008 relating to his practice are summarized below: Advertising in trade journals $2,400 Sch C Office Supplies (Including drafting materials) 1,200 Sch C Contribution to H.R. 10(Keogh) plan 9,000 Front of the 1040 under self employed IRA deduction State occupation license 300 Sch C Subscriptions to trade journals 240 Sch C Membership dues to trade associations 180 Sch C Landscape models (amount paid to topographer Sch C for several land reclamation projects) 3,200 Business phone and Internet service 860 Sch C Premiums on medical insurance (covering self, spouse, and dependent) 3,800 Front of the 1040 under self employed health insurance premiums

4. To save on rent and as a matter of convenience, David maintains an office in the home. Twenty percent of the 3,000-square-foot living area is devoted to the office. David inherited the home on Cody Way from his father, who died on June 6, 2001, when it had a fair market value of $400,000 of which $40,000 was allocated to the land. Its current fair market value is $500,000 ($50,000) allocated to the land). County land records reflect that David s father bought the land in 1967 for $6,000 and built the house in 1971 at a cost of $60,000. The

home information goes on Form 8829. Follow the instructions on each line, to properly add and divide. Use 20% of 3,000 (600) as the square footage. Relevant information regarding the property for 2008 is summarized below. Casualty insurance (section b) on the 8829. Repairs and maintenance Utilities $2,300 These three expenses are indirect expenses

2,900 4,800

The property taxes and mortgage interest on the property are listed in item 15 below. They go as indirect expenses in column b of the 8829 also. In addition to the repairs and maintenance noted above, David had the office repainted at a cost of $1,200. Repairs and maintenance in same column of the 8829. The furniture in the office, including business equipment, was properly expensed in the year bought and has a zero basis. However, on March 5, 2008, David purchased a heavy-duty, fire-resistant file cabinet with security-vault features for $4,800. This can go in other expenses on the 8829. He made the acquisition to safeguard and maintain the privacy of client data. If possible, David prefers to avoid capitalizing and depreciating the cabinet. As to the business of the residence, depreciation has been based on MACRS applicable to the 39-year nonresidential realty. After filling out the bottom of form 8829, fill out form 4562 under nonreal estate 39 yr. property.

5. On February 4, 2007, David purchased for $41,000 (including sales tax) and Infiniti crossover SUV (gross weight of 6,000 lbs), which he uses 90% of the time for business. This goes on form 4562 also, as depreciable property. Use 90% as the business use, with the basis of $41,000. No trade-in was involved, and he did not claim and section 179 expensing of the cost. Under the actual operating cost method, he uses 200% declining balance with a halfyear convention. [Hint: See table 3 in the instructions to Form 4562.] His expenses pertaining to the operation of the Infiniti for 2008 are as follows: The method is DDB 200%, and the convention is HY. Just fill in each block on the 4562 form. Gasoline $3,300 Oil changes and lubrication 120 Auto insurance 1,600 Repairs 240 Auto club dues 180 License and registration 60 You can fill these expenses in, but it won't matter, because you cannot use expenses on a vehicle that you are depreciating, and the problem states he is depreciating the car.

During the business use, David received three moving traffic violations (total fines of $680) and incurred tolls and parking charges of $440. The Infiniti was driven a total of 14,500 miles during 2008 (mileage was incurred evenly during the year.) The violations can't be expensed. The parking tolls go on the AUTO form (from Sch C under auto expenses). The mileage also goes on the AUTO form from Sch. C. 6. Betty is a licensed paralegal and is employed on a part-time basis by several local attorneys. She commuted to work (using the family Saburban) for a total of 813 miles and paid parking fees of $310. Her earning and job-related expenses are summarized below: This is a separate 1040. She also needs a Schedule C. The mileage goes on pg. 2 of the Sch. C since she is not depreciating her auto. The tolls are irrelevant, since she is using mileage. Salary (from four employees) I assume this is a typo for employers, not employees. $38,000 Gross receipts, Sch. C Subscriptions and dues to professional organizations 180 Sch C Laptop computer 1,200 This goes on form 4562 and gets depreciated. Use it as 5 year property, and you can use a Section 179 expense to depreciate the entire amount. Occupational license 80 Sch C Continuing education correspondence course 120 Sch C She purchased the laptop computer on March 12 and uses it about 80% of the time for business. On the 4562, 80% would be business use. The correspondence course is required for retention of her license. Betty is considering going to law school, so she attended a series of LSAT preparation sessions at a cost of $350. This can either go on Sch C as education expense, or can go on a form 8863 under lifetime learning credit. Because Betty is a parttime employee, she is not covered by and of her employer s medical or retirement plans. During 2008, however, she contributed $5,000 to a traditional IRA that she established several years ago. This goes on the front of her 1040 under self employed IRA deduction. As to the family Saburban, the Lees use the automatic mileage for tax purposes. This means that any expenses (tolls, gas, etc. are irrelevant). The mileage goes on pg. 2 of the Sch. C.