Question

Using 2019 IRS forms and the information below, William is 53 and Joyce is 51. They are married. William is a manager for ABC Corporation, a firm that manufactures and distributes widgets. Joyce is a self-employed author of children’s books. The taxpayer wish to minimize their tax by deferring income and accelerating deductions when possible.

1.the taxpayers received the following interest payments:
XYZ Bank $ 50
New York State Bonds 600
New York City Bonds 1,300
Puerto Rico Bonds 500
Ford Motor Co. Bonds 1,000

2.Joyce and her brother are co-owners of and active participants in a furniture-restoration business. Joyce owns 30 percent and her brother owns 70 percent of the
business. The business was formed as an S corporation. The basis of Joyce’s stock is $31,000. Joyce’s share of the corporation’s loss for the year is $5,000.

3.The Jones’s received a federal income tax refund of $1,200 on May 12, 2019. On May 15 they received a refund from the District of Columbia for $900 which they did not deduct on the preceding year’s return.

Answer 1

Ans:- Option 2nd is best way to minimize their tax by claim for joyce's share of the corporation's loss for the year is $ 5,000.

Reason:-

1. Schedule K-1 is an IRS form that is important if you are the owner or co-owner of a pass-through business.
2. Form 1065 and Form 1120S both include a separate part called Schedule K-1. Each Owner of the pass-through business fills a Schedule K-1. The Form reports the owner's individual share of the business's income or loss.
3. So, Joyce can claim for the share loss for the year is $ 5,000.

Ans :- Option 1st is also effective to accelerated deduction because in IRS form Interest received from banks and bonds can claim under "Form 1099-INT" in which they claim for received interest payment i.e., XYZ Bank $ 50, New York State Bonds $ 600, New York City Bonds $ 1,300, Puerto Rico Bonds $ 500, Ford Motor Co. Bonds $ 1,000.

Note:- Using 2019 IRS forms the taxpayer wish to minimize their tax by deferring income and accelerating deductions.

• Option 2nd is most effective method to minimize the tax. Therefor, The Claim in option 2nd is $ 5,000 and in option 1st is $ 3,450.
• Option 1st is also good option for claim. But not good as option 2nd.
• Option 3rd Is not related to both the tax payer. Because the person name is not same as above mention.