1040 Stuart Case Study Facts: Data Entry

Stuart Case Study Facts: Introduction

This page is used to provide help when you are not sure where to enter data. You do not need this page if you know where all the information belongs.

Forms are accessed from the Forms List window at the left of the screen. Make sure Organizer is selected.

Taxpayer Information

  1. Select Quick Track > Basic Return Data.
  2. Verify all the taxpayer information. Since the Stuarts moved this year, you need to change the address to the new address.
  3. Enter 39 First Street Barstow, CA 94555.
  4. Scroll down to answer the Presidential Election Campaign Fund Question.
  5. Answer No for Jerry and Yes for Shirley.

Dependent Information

  1. Select Quick Track > Dependent Information.
  2. Verify all the dependent information.
  3. Enter the Qualified expenses paid in 2019 of $1,450.
  4. Enter the Child Care Information:
    Child Care
    Dependent    		Child Care
    Provider    		Child Care
    Provider ID    		Amount Paid
    for Child Care
    Stephanie StuartKiddieCare
    1234 Wonder Way
    Benecia, CA 98765    		94-9999999$1,450

Wages and Salaries

  1. Select Quick Track > W-2 Wages & Salaries.
  2. Enter the wage information. The wages are the same for Social Security and Medicare Wages. YOU MUST ENTER THESE.
     Jerry StuartShirley Stuart
    EmployerComputer
    Salesland    		Jan’s
    Bookbinders
    Wages

    $16,250

    		$ 8,750
    Federal Tax
    Withheld

    $ 2,250

    		$ 650
    Social Security
    Tax
    Withheld

    $ 1,008

    		$ 543
    Medicare Tax
    Withheld

    $ 236

    		$ 127
    California State
    Tax
    Withheld    		$ 975$ 131
  3. Select Quick Track > W-2 Wages & Salaries > Add new Employer Name.
     Jerry Stuart
    EmployerComco, Inc.
    Wages$72,327
    Federal Tax
    Withheld    		$ 8,712
    Social Security
    Tax
    Withheld    		$ 4,484
    Medicare Tax
    Withheld    		$ 1,049
    California State
    Tax
    Withheld    		$ 3,349

Interest Income

  1. Select Quick Track > 1099-INT Interest.
  2. Enter the 1099-INT Payer, Farmers Bank, and click OK.
  3. Enter $150 in box 1 (Interest income not included in Box 3).

Business Income (Schedule C)

The Stuarts have a retail flower shop in a building on their land called Corner Florist.

  1. Select Quick Track > Business Income.
  2. Verify the following information:
    Business NameCorner Florist
    Business Address39 First Street
    Barstow, CA 94555
    Business Code453110
    Principal BusinessFlorist
  3. Scroll down and verify that Taxpayer materially participates is selected in the Income Type box and the activity is considered All at Risk.
  4. Click the Sch C Inc/Exp tab.
  5. Enter income and expenses:
     IncomeExpense
    Gross Receipts from
    Plant Sales    		$20,000 
    Advertising $ 1,500
    Insurance $ 350
    Mortgage Interest Paid $ 1,250
    Office Expenses $ 250
    Supplies $ 125
    Utilities $ 475

Property and Equipment

The business has several assets that were purchased in 2017, 2018, and 2019.

  1. Under the Corner Florist folder, select Depreciation and Amortization > Asset Detail.
  2. Verify the information for the Refrigerators and Laptop Computer:
     Date Placed in
    Service    		CostMethodAccumulated
    Depreciation
    Refrigerators02/01/2017$ 4,500Macrs 7Yr$2,797
    Laptop Computer07/03/2018$ 700Macrs 5Yr$283
  3. For the laptop, scroll down and verify that Prior Year Section 179 Expense appears in the list box and $300 is entered in the Current Yr/Prior Year override field.

New Assets

  1. Under the Corner Florist folder, select Depreciation and Amortization > Asset Detail > Add new Asset.
  2. Enter the asset information:
     Building

    Cloud
    Document
    Storage

    Purchased 01/01/2019

    06/07/2019

    Cost $45,000

    $600

    Method 39 Year MACRS

    7 Year MACRS

  3. For the Cloud Storage, to enter the current year §179 amount, scroll down and select Elect Section 179 and limit to $500,000 from the list box.

Pension Plan Distribution

  1. Select Income > Retirement Distributions > 1099-R > Add New 1099-R Payer Name.
  2. Enter Computer Salesland and click OK.
  3. Enter the full amount received in the Box 1 Gross distributions received in 2019.
  4. Check the box 2B Taxable amount not determined.
  5. Select Distribution Code 1 for Box 7.
  6. Scroll to Rollovers/Conversions.
  7. Check the box for Entire distribution was rolled over.

Farm Income (Schedule F)

  1. Select Income > Farm Income > Stuart Farms > Farm Information.
  2. Verify the following information:
    NameStuart Farm
    Agricultural Activity Code111400
    Principal Product Plants
    Accounting MethodCash
  3. Scroll down and verify that Taxpayer materially participates is selected in the Activity Type box and the activity is considered All at Risk.
  4. Click the Income and Expense tab. In the Farm Income - Cash Method > Other Farm Income section, enter the income: $10,000.
  5. In the Farm Expenses-Cash and Accrual > Other Expenses section, enter expenses:
    Chemicals$ 100
    Fertilizer$ 250
    Insurance$ 1,150
    Labor Hired$ 750
    Seeds and Plants$ 2,000
    Supplies$ 150
    Utilities$ 475

Property and Equipment

  1. Under the Stuart Farms folder, select Depreciation and Amortization > Asset Detail > Equipment.
  2. Verify the information for the existing equipment:
     Date Placed in Service CostMethod

    Accumulated
    Depreciation

    Equipment01/01/2017$5,000Macrs 7yr$2,814
  3. This equipment was sold on 07/01/2019 for $4,100. Select the Retirement/Disposal tab (top of the screen).
  4. Select the check box Retire asset.
  5. Enter 6 months in the Depreciation (Override) field.
  6. Select the Bulk sale identifier box. This takes you to the Gains form.
  7. Enter the sale date of 07/01/2019.
  8. Enter the sale price of $4,100.
  9. Select 1245 Property for the Type of Sale.

New Assets

  1. Under the Stuart Farms folder, select Depreciation and Amortization > Asset Detail > Add new Asset.
  2. Enter the asset information:
     GreenhouseSprinklers
    Purchased06/01/201909/08/2019
    Cost $7,000

    $1,500

    Method7 Year MACRS

    7 Year MACRS

  3. The sprinklers were only used 45% for business. Scroll to Business Percent and Salvage Value, and enter .45 in the Business use percentage box.

Miscellaneous Income

  1. Select Miscellaneous Income > Miscellaneous Income > Miscellaneous Income.
  2. Enter $790 for State Income Tax refunds received by the Stuarts in 2019. Allocate this between 2018 and 2019 as follows:
  3. 2018 paid: $340
  4. 2019 paid: $450
  5. Select Miscellaneous Income > Sch A Info State and Local.
  6. Select MFJ as the Filing Status.
  7. Verify that $340 appears in 2018.
  8. Enter $450 in the 2019 Taxes Paid field.
  9. Enter the last year’s itemized deductions in the before and after limitation fields.

If you do not want the amount prorated, do not enter an amount in the 2018 and 2019 Tax Paid fields. Only enter an amount on the State Income Tax refund field under Miscellaneous Income.

Capital Gains and Losses - Carryovers

The Stuarts have a long-term capital loss carryover of $8,000.

  1. Select Gains and Losses > Capital Gains and Losses > Carryovers, Print, Form 2439, & misc.
  2. In the Carryover box, verify long term carryovers. For AMT and State purposes, the amounts were the same.
  3. Enter $8,000 for the Long-Term Capital Loss Carryover.

On screens where only losses are entered, such as capital loss carryovers or suspended passive loss carryovers, enter the loss amount as a positive number.

Sale of Home

  1. Select Gains and Losses > Sale of Home > Add New Date Home Sold.
  2. Enter 07/02/2019 and click OK.
  3. Enter $175,000 for the Selling Price.
  4. Enter information on the old home:
    Purchase of Old Home$ 152,000
    Purchase Date06/13/2012
    Selling Expenses$ 14,000

Taxpayers meet use test requirements. Click the Yes radio button.

Adjustments to Income

Form 2106 - Employee Business Expenses

Jerry Stuart qualified as a handicapped employee, so he is able to claim unreimbursed business expenses, including those related to his business automobile, are entered by going through the Forms List window:

  1. Select Adjustments to Income > Employee Business Expense > Add new Occupation.
  2. Verify that the occupation of Salesman is entered.
  3. Verify that the TAXPAYER radio button is selected in the Ownership box.

    Leading zeros will not display in the screen field.

  4. Verify that the Handicapped Employee radio button is selected in the Special Treatment box.
  5. To enter the amounts for meals and entertainment, click the Business Expenses tab.
  6. Enter the full amounts of meals and entertainment. The system will apply the limitation.
  7. Enter amounts for dues and postage.

Itemized Deductions

  1. Select QuickTrack > 1098-Mortgage Interest.
  2. Enter First Mortgage Corp, and click OK.
  3. Enter the following:
    • Interest: $12,800
    • Deductible Points Paid: $ 1,500
    • Real Estate Taxes: $ 2,500

Depreciation Detail

  1. Select Depreciation and Amortization > Asset Detail > Add New Asset.
  2. Enter 2019 Cadillac, and click OK.
  3. Enter the date, cost, and method (5 Yr MACRS).
  4. Two additional codes are necessary. Scroll down to the Property Type box.
  5. Click the AUTOMOBILES radio button because the automobile meets the luxury automobile definition. This is critical for the system to treat automobile depreciation correctly.
  6. Click VEHICLE 1 DEPRECIATION DETAIL from the Vehicle and Home Depreciation drop-down list box.

    This will indicate the first vehicle on Form 2106. Vehicle 1, 2, 3, 4, 5, and 6 depreciation is taken to the automobile details. Six vehicles may be entered on each Form 2106. This is the area to designate vehicle 1, vehicle 2, vehicle 3, vehicle 4, vehicle 5, or vehicle 6.

Vehicle Information

  1. Under the Salesman folder, select Vehicle Expense Information > Vehicle.
  2. Enter vehicle expenses.
  3. Enter mileage:
    • Total miles driven all year: 21,750 miles
    • Business miles 19,575
  4. Enter auto expenses:
    • Gas, oil and insurance $3,385
  5. To answer the vehicle expense questions, select Yes to all applicable questions except the question pertaining to whether the employer provided a vehicle during off hours.

Child and Dependent Care Credit

The Stuarts used a child care service in 2019.

This information will automatically carry from your Dependent Organizer if you entered a Child Care Credit amount on the Organizer. If not, you can enter it here.

  1. Select Credits > Child and Dependent Care Credit > Credit Information.
  2. Enter or verify that the following information is correct:
    • Stephanie Stuart: 642-15-2357
    • Born: 06/01/2014
    • Child Care Amount: $1,450
  3. Click the Care Provider Information button.
  4. Enter or verify the Child Care Provider information:
    • Provider: KiddieCare
    • ID#: 94-999999
    • Address: 1234 Wonder Way, Benecia, CA 98765

Estimates and Penalties

Estimated Tax Payments

The Stuarts want estimated taxes set up with their own amounts and any overpayment to be refunded.

  1. Select Estimates and Penalties > Estimated Tax/Overpayment > Estimated Tax/Overpayment > General Options.
  2. Select the Overpayment Option.
  3. Select Refund entire amount of overpayment.
  4. Select the Estimate Option.
  5. Select Estimated tax equal to amount entered below.
  6. Enter 30,000.

Underpayments

  1. Select Estimates and Penalties > Underpayment > 2210 Penalty.
  2. Verify that the Prior Year Information shows $1,000 for the prior year tax liability.

Transmittal Letter and Filing Instructions

The Stuarts should receive a combined transmittal letter and filing instructions with their return. Their return will be filed with the appropriate IRS Center for California residents.

  1. Select Letter and Filing Instructions > General Options.
  2. Select the option to print Transmittal Letter and Filing Instructions.
  3. Recompute the return. Select Compute > Full Recompute.
  4. Verify that the Auto-Selected Center for California is Fresno, CA. This should be selected automatically.
  5. Select Automatic Generation under IRS Service Center (Override).

Most of these items will flow automatically in a client’s real account and are set up by the Firm Administrator, so no entries in this Organizer are usually required.

Preparers can use the procedure outlined above to override the account defaults on a return-by-return basis.

 

 

 

Case Study Facts/stuart_data_entry.htm/TY2019

Last Modified: 03/19/2020

Last System Build: 06/17/2021

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