Question

We have two clients with tax issues that I have summarized below. Please research these issues...

We have two clients with tax issues that I have summarized below. Please research these issues and respond to me with a memo by February 17.
Issue #1
Our clients Fred and Sarah Thompson were divorced in December 2019. During their marriage, they had two children, Aaron and Lisa. At the time of the divorce, the children were ages 13 and 12, respectively. The divorce decree provides for joint custody of the children. Specifically, Fred and Sarah are to have the children in alternating weeks. Both Fred and Sarah are professionals with relatively high incomes (approximately $200k each), so the divorce decree doesn’t provide for child support. It also does not stipulate which parent is to claim the children for child tax credit purposes.
During 2019, Fred and Sarah tried to alternate custody to the best of their ability. Work issues, however, caused a great deal of “trading” to take place. Fred kept the children for two weeks while Sarah was out of town on business during her custody week. Sarah would return the favor by keeping the children during one of Fred’s weeks. Unfortunately, neither parent kept any records, so it’s impossible to determine who had the most custody. Sarah feels that she had custody half of the year. Fred tends to agree as to Lisa, but disagrees as to Aaron. Fred recalls that he took Aaron walleye fishing during one of Sarah’s custody weeks. It looks like the two of them contributed equally to the children’s support. Neither parent has or will sign a Form 8332. Which parent is entitled to claim the child tax credit for Aaron and Lisa?
Issue #2
Fred is an insurance agent who receives a commission on each policy he sells. During 2019, he purchased a policy on his own life, naming his wife, Sarah as the beneficiary. He did not report the commission on the policy as gross income because he considered the commission a reduction in his cost (like a discount) for the life insurance. The Thompson’s 2019 joint return is being audited and the agent is challenging the exclusion. Is the agent correct, or is the position taken by our client correct? Provide citations to all relevant authority. I’ll need that for my meeting with the auditor.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Issue #1 Thompson & Sarah divorced in Dec 2019. Live Apart But have joint custory and both are Independent form 83328 RevocatIssue #2 freed in an Insurance agent * commission recruuded on purchasing policy for wife Sarah fully earable.. * Clint us no

Add a comment
Know the answer?
Add Answer to:
We have two clients with tax issues that I have summarized below. Please research these issues...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Instructions: Please complete the 2018 federal income tax return for Sarah Hamblin. Be sure to include...

    Instructions: Please complete the 2018 federal income tax return for Sarah Hamblin. Be sure to include only required tax forms when completing the tax return. For purposes of this assignment, unless instructed otherwise, you do not need to attach Form 8582. Also, ignore the requirement to attach the Form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. Sarah Hamblin and her now ex-husband Kevin were legally...

  • 2019 Tax Return for Paul and Donna

    Paul and Donna Decker are married taxpayers, ages 44 and 42, respectively, who file a joint return for 2019. The Deckers live at 1121 College Avenue, Carmel, IN 46032.PaulDonnaSalary6800056000Federal tax   withheld67706630State tax   withheld14001100FICA52024284Social Security111-11-1112123-45-6789 Donna is the custodial parent of two children from a previous marriage who reside with the Deckers through the school year. The children, Larry and Jane Parker, reside with their father, Bob, during the summer. Relevant information for the children follows:LarryJaneAge1718Social123-45-6788123-45-6787Months spent99 Under the divorce decree,...

  • Could you check the answer for me ? Federal Tax Law Update Test for Circular 230...

    Could you check the answer for me ? Federal Tax Law Update Test for Circular 230 Professionals False 1. Pete and Shirley are filing a joint return. They have two dependent children. The total amount of their exemptions for tax year 2019 is $16,800. 2. Bill and Martha are filing a joint return. They are both over 65 years old. Neither of them are blind. What is their standard deduction? $ 2600 (Do not enter dollar signs, commas, periods, or...

  • 1. 2. Exercise 13-16 (LO. 4) Santiago and Amy are married and file a joint tax...

    1. 2. Exercise 13-16 (LO. 4) Santiago and Amy are married and file a joint tax return. They have three dependent children, ages 12, 14, and 18. All parties are U.S. citizens. The couple's AGI is $140,000. Santiago and Amy's child tax credit for 2019 is $ x and dependent tax credit is $ x. Problem 13-31 (LO.4) Jason, a single parent, lives in an apartment with his three minor children, whom he supports. Jason earned $27,400 during 2019 and...

  • Tax return problem Tax Return Problem 3 Kathy and Rob Wright obtained a divorce effective May...

    Tax return problem Tax Return Problem 3 Kathy and Rob Wright obtained a divorce effective May 1, 2017. In accordance with the divorce decree, Rob was required to pay $2,250 per month until their only child turns 18; then the payments would be reduced to $1,500 per month. Kathy has full custody of the child and appropriately takes the dependent deduction and child credit. Furthermore, Rob was to transfer title of their house, which had a cost of $150,000 and...

  • Comprehensive Problem 5-1 John Williams (birthdate August 2, 1976) is a single taxpayer. John's earnings and...

    Comprehensive Problem 5-1 John Williams (birthdate August 2, 1976) is a single taxpayer. John's earnings and withholdings as the manager of a local casino for 2019 are reported on his Form W-2 (see separate tab). John received Form 1098 from the Reno Bank & Trust (see separate tab). John's other income includes interest on a savings account at Nevada National Bank of $13,691. John pays his ex-wife, Sarah McLoughlin, $3,900 per month in accordance with their February 12, 2013 divorce...

  • • Charlie and Samantha are resident aliens, married, and want to file a joint return. •...

    • Charlie and Samantha are resident aliens, married, and want to file a joint return. • They have three children. Harry is 8 years old and a resident alien. Sherry is 3 years old and Maria is 1 year old and both are U.S. citizens. All three children lived with their parents in the United States all year. Charlie, Samantha, and Harry have Individual Taxpayer Identification Numbers (ITINs). Sherry and Maria have Social Security numbers. • Charlie earned $38,000 in...

  • Paul and Donna Decker are married taxpayers, ages 44 and 42, respectively, who file a joint...

    Paul and Donna Decker are married taxpayers, ages 44 and 42, respectively, who file a joint return for 2019. The Deckers live at 1121 College Avenue, Carmel, IN 46032. Paul is an assistant manager at Carmel Motor Inn, and Donna is a teacher at Carmel Elementary School. They present you with W–2 forms that reflect the following information: Paul Donna Salary $68,000 $56,000 Federal tax withheld 6,770 6,630 State income tax withheld 1,400 1,100 FICA (Social Security and Medicare) withheld...

  • 1. Wanda is a single parent (divorced). She has a 5-year-old daughter. She receives the following...

    1. Wanda is a single parent (divorced). She has a 5-year-old daughter. She receives the following items of income during the year: • Wages - $33,000 • Child support – 9,600 • Workers compensation - $14,000 • Commissions - $8,000 • Interest - $300 • Gift from her grandfather - $10,000 What is the amount of income Wanda will need to report on her tax return for the year? Select one: a. $33,000 b. $51,300 c. $50,900    d. $41,300...

  • False 1. Pete and Shirley are filing a joint return. They have two dependent children. The...

    False 1. Pete and Shirley are filing a joint return. They have two dependent children. The total amount of their exemptions for tax year 2019 is $16,800. 2. Bill and Martha are filing a joint return. They are both over 65 years old. Neither of them are blind. What is their standard deduction? $ 27000 A. $0 (Do not enter dollar signs, commas, periods, or decimal points in your answer.) 3. Sarah's divorce was finalized on March 4, 2019. As...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT