This practice set will build on the Practice Set #1.
All facts remain the same as in Practice Set #1. In addition
to the facts in Practice Set #1, Mary has now started a business. She has named
her business Mary’s Crafts – Made to Order. It is a SMLLC. Additionally, Eric
wants to take an exotic vacation. He has heard wonderful things about climbing
Mount Everest. To fund the trip he decides to sell stock that has been
previously gifted to him. The general details for Eric, Mary and the children
remain the same as in Practice Set #1.
To complete this Practice Set #2, please add to your
Practice Set #1 tax return the following activity:
·      
See excel schedule for activity from Mary’s
Crafts – Made to Order. Please review the income and expenses and other details
and include the activity in the Amoth’s return.
·      
To fund the Amoth’s vacation this year they have
chosen to sell several gifts that they have received through the years.  The first of these was 100 shares of Dupont
stock they had received as a gift in January 2005.  Uncle Billy had a basis in the stock of
$70,000. At the time of the gift the FMV of the stock was $100,000. Eric sells
the stock for $100,000 on 11/1/23.
·      
Eric also sold for $90,000 on 6/1/2023 the 100
shares of Apple stock that Uncle Billy gave him in 2017. The FMV at the time of
the gift was $100,000 and Uncle Billy’s basis was $120,000.
·      
The last stock was 50 shares of Dollar Tree.
Eric decided to sell it on 7/27/23 for $115,000 Uncle Billy gave him for
Christmas 2016. Ironically, Uncle Billy’s basis in these shares was $120,000
and FMV at the time of the gift was $100,000.
Remember to include the activity from Practice Set #1. The
details were:
·      
Eric received $200,000 in salary from Red Steel
Corporation, where he is a construction engineer. Federal withholding was
$37,750 and the appropriate FICA and Medicare withholding was done. CA
withholding was $15,100.
·      
Eric’s mother passed away 6/22/2023. He received
a parcel of land worth $50,000 on 6/22/2022, no alternative valuation date was
elected. He sold the land on 12/24/2023 for $50,600. He also received life
insurance proceeds in the amount of $150,000. He invested a portion of the
proceeds from the sale into Disney stock for his three children. The value of
the Disney stock at the time of purchase was $10,000 per child.
·      
Eric and Mary received $10,400 from Los Angeles
school district bonds.
·      
Eric received $5,300 interest from a Merrill
Lynch money market account.
·      
Eric received $15,000 of dividend income from
Ford Motor Company stock that he owned for over 2 years.
The Amoth’s gave to the Goodwill items with a
FMV of $650. They provided the receipt for the household goods donated on 7/15.
The goodwill is the local one in Mockingbird Heights at 123