1040 Scenario # 2:
ACCT 310 INTRO – FEDERAL INCOME TAXATION
85% of grade: Mister and Mayda Money have hired you to prepare their 2018 Federal income tax return. Please
determine which forms you will need based on the information provided. The 2018 forms can be printed from
www.irs.gov. The return must be prepared using pen or pencil and cannot be typed or completed using
software. Please turn in the 2018 1040 and required attachments (assume the returns are going to be
electronically filed, so W-2s, 1099s, etc., do not need to be included) to Professor Staebell to review at the
beginning of class on the day they are due. Submissions must be stapled with the students name on the top of
The taxpayer’s name is Mister Money. His wife’s name is Mayda Money and they have two children together,
Marry Money and Iam Money. Mister’s mother, Lotta Money, lives with Mister, too. Lotta does not pay any
portion of the household expense and Mister pays for Lotta’s groceries and medical expenses during the year.
Lotta receives $1,000 a month of social security income and it is all deposited into a savings account that she
does not touch. Mister has a daughter from a previous marriage, Mia Money. Mister’s ex-wife is the custodial
parent of Mia and has signed a form 8332 agreeing not to claim Mia as a dependent in odd years. The Moneys
live at 44 Oasis Lane, Rochester NY 14622.
The following are the dates of birth and SS#s for each of the Moneys:
Mister: 3/2/1949 SS# 111-22-3456
Mayda 1/15/1963 SS# 222-33-4567
Marry: 8/2/1998 SS# 121-34-6785
Lotta: 10/1/1929 SS# 001-23-2172
Mia: 3/21/1995 SS# 103-33-4400
Iam: 10/15/2003 SS# 109-33-8902
- The Moneys would like their filing status to be whatever is most advantageous from a tax standpoint
- Mister receives $12,000 in alimony from his ex-wife during the year from a divorce finalized over ten
- Mister won $250 from a 50/50 raffle ticket that he purchased from a Red Cross charity event. Mister
spent $25 on the ticket.
- Mister spent $5,000 on a trip to the casino. He didn’t win anything at the casino. On the way home he
bought a scratch off ticket and won! He received a W-2G form documenting the winnings.
- Mister was unemployed at the beginning of the year and collected unemployment income.
- Everyone in the household had MEC (minimum essential coverage) health insurance.
- Mister retired during the year and started receiving social security.
- Marry is a college student but has a full-ride scholarship and has to pay no tuition out-of-pocket.
Business activity: Mayda became a Mary Kay makeup sales representative on 1/1/2018 and made a
commission for the products she sold. She did not carry any inventory and all product purchases occurred
through the Mary Kay website with Mayda listed as the sales representative.
- $200 spent on office supplies like ink, toner, etc.
- 1,425 business related miles driven. She drove about 10,000 miles driven in total
- $785 spent on meals/coffee with clients and potential clients
- She had 10 people host Mary Kay living room parties and she gave each hostess a $20 gift certificate as
a “Thank You” for hosting.
- Purchased a new computer for the business on 2/15/2018 for $950. She would like to elect the
depreciation method that would result in the largest deduction on the 2018 return.
- Converted a 200 square foot room to a home office on 1/1/2018.
The Moneys do not want any tax due to be withdrawn from their bank account and they do not want any
refunds directly deposited into their bank account. If the Moneys are getting a refund, they do not want it
credited to next year.
Additional documentation provided by the Moneys is attached.
• Round numbers to the closest whole number.
• Use commas when writing numbers greater than $999, i.e. “1,000” instead of “1000”
• Staple 1040 and attachments together using the order sequence number on the top right of each
o Forms and Schedules
• Scenarios will not be graded past line 78
15% of grade: Please send Mister & Mayda Money a detailed email with the results of their Federal tax return
and why they are receiving a refund or owe additional tax. The subject of the email should be appropriate for
the assignment (emailing a taxpayer/client) and will be considered in the grade for this assignment. Their email
address is GeneseoTaxClass@gmail.com. Only the first email sent will be considered for grading so do not send
until the email is finalized. Emails must be sent prior to the start of class and late emails will not be accepted.
The grading rubric for the email will be as follows:
• 8 points: Grammar, professionalism and format will be graded based on the rules in the Business
Writing book assigned at the beginning of the course. Business-style formatting is used (left justified,
bullets and lists when appropriate). Email is no longer than necessary and extra “fluff” is eliminated
• 2 points: No inaccurate information
• 2 points: Email is easily understood by a taxpayer with minimal tax knowledge. Avoid referencing
specific line numbers on the return as these are not usually known the average taxpayer.
• 3 points: Email contains relevant information that a taxpayer would like to know (what income is
taxable, what is deductible, what credits and deductions apply, why they are getting a refund or owe
• Never email confidential information. Do not attach the tax return to the email.
• Two identical emails will both receive zeros for this portion of the assignment.