Tax Project – ACC 4301

Marci and Mark Martin – Married Filing Jointly

1. Marci and Mark Martin are married and file a joint return. Mark is a full-time employee of
Parsons Corporation. Marci is a CPA and has her own practice. Their two children, Darci
and Amber attend pre-school as full-time students. Both live with their parents at their
residence: 7622 High Knoll Dr., Richmond, Texas 77469. The Martins own this home and
have lived here for over ten years. Their home phone number is 281-554-1040.
2. Social security numbers (SSN) and birthdates (DOB) for Mark, Marci, and their children are
as follows:
Mark W. Martin (DOB: 11/5/1989) ..............................................................332-25-9610
Marci M. Martin (DOB: 5/14/1992) .............................................................333-51-9251
Darci G. Martin (DOB: 11/6/2019)................................................................452-19-6552
Amber N. Martin (DOB: 2/12/2016) .............................................................452-23-5694
3. Neither Mark not Marci wants to contribute $3 to the Presidential Election Campaign
Fund.
4. Mark and Marci did not receive, sell, send, exchange, or otherwise dispose of any
financial interest in any virtual currency during the year.
5. The family does not purchase insurance through a government-sponsored marketplace.
Mark’s employer provides health insurance coverage for the Martins. The coverage was
reported on Form 1095-B.
6. Mark received a Form W-2 from his employer, Parsons Corporation, 1435 Technology
Street, Sugar Land TX 77069 (EIN 68-3123857) which reported the following relevant
information:
Box 1: Gross wages and taxable benefits . . . . . . . . . . . . . . . . . . . . . . $126,000
Box 2: Federal income tax withheld . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Box 3: Social Security wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106,000
Box 4: Social Security tax withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,572
Box 5: Medicare wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,000
Box 6: Medicare tax withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,363
.

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7. Marci operates her business under the name "Marci Martin, CPA." Her office is located at
10456 Southwest Fwy N, Sugar Land, Texas 77479. The federal EIN for her business is 51-
4867579 and the principal business code is 54111 (Accounting and Tax Preparation).
Marci, who materially participates in her business, has operated it profitably for 3 of the last 4
years and is fully "at risk" with respect to her investment. She also has filed all required
Forms 1099. With respect to the tax treatment of small items purchased by her business,
Marci wishes to elect the de minimis safe harbor.
8. In accounting for her business, Marci uses the cash method. Her records show the
following income and expenses:
Gross receipts (not reported on Form 1099) ....................................................... $155,000
Gross receipts (reported on Form 1099-NEC, box 1; payer was
Click Advertising, EIN 68-8752318, nonemployee compensation) ................. 64,000
Expenses:
Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Insurance (other than health insurance) . . . . . . . . . . . . . . . . . . . . . . . . 7,800
Legal and professional services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Office expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600
Equipment and furniture rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600
Office rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800
Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Meals (50% deductible) . . . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . . 950

9. In connection with her business, Marci often travels from her business location to visit
clients and attend seminars. For the year, her auto log shows that she drove her car (a 2019
Lexus, placed in service on 1/14/2020) a total of 20,450 miles, of which 7,800 miles were for
business purposes prior to July 1, 4,000 miles were for business after June 30, 3,400 miles
were for commuting, and 5,250 miles were personal. Marci has written evidence to support
her mileage. Although Marci’s car is available for use during off-duty hours, she
occasionally drives Mark’s car for personal errands. In the past, Marci has claimed a
deduction for the car using the standard mileage method, and she would like to continue
doing so this year. In 2022, business mileage is deductible at 58.5¢ per mile before July 1
and 62.5¢ per mile after June 30. Other relevant expenses for the car include interest of
$3,200 on an auto loan and $508 for business-related parking and tolls.
10. On May 10, 2022, Marci sold some furniture for $800 (7-year MACRS property). The
furniture was used 100 percent in her business and was purchased on February 12, 2017 for
$5,600. She claimed $2,800 of 50% bonus depreciation (special depreciation allowance) in
the first year of ownership and use. She also claimed MACRS depreciation of $1,925 in
prior years.

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11. Mark and Marci received Forms 1099-DIV reporting the following dividend income:
Box 1a Box 1b
Ordinary Qualified
American Star . . . . . . . . . . . . . . . . . . . . $ 250 . . . . . . . . . . . . . . . . . . . . . . . . $ 250
Push Buttons .................... 400 . . . . . . . . . . . . . . . . . . . . . . . . 400
TD Ameritrade . . . . . . . . . . . . . . . . . . . . 1,800.................................................... 1,200
12. Mark and Marci have neither a foreign bank account nor a foreign trust, and they did not
receive any distributions from a foreign trust during the year.
13. Mark and Marci received Form 1099-B from TD Ameritrade reporting the following
security sales during the year. For all of the sales, the basis amount was reported to the IRS
and box 5 was not checked because the sales involved covered securities.
Date Date Sales Basis
Corporation Shares Sold Acquired Price Box 1e
Tata Inc 600 09-18-2022 02-15-2022 $24,200 $18,200
Adani 800 10-21-2022 04-25-2022 10,000 16,800
Total short-term $34,200 $35,000
Techtest 300 11-05-2022 07-25-2016 6,500 4,500
International funds 100 12-20-2022 08-21-2019 10,100 6,000
Total long-term $16,600 $10,500
14. Mark and Marci incurred and paid the following personal expenses during the year:
Taxes:
Sales tax rate (365 days in Texas; State 6.25%; Local 2.00%) ......................... 8.25%
Real estate property tax on home ........................................................................ 8,500
Interest:
Mortgage used to purchase home (principal balance $400,000;
origination date June 10, 2015; reported by State Street Bank
on Form 1098 - see taxes, above) ................................................................. 17,500
Margin account with TD Ameritrade (investment interest expense) . . . . . 500
15. Mark and Marci contracted with Kinder Care Child Care Service to care for Darci and
Amber, while they were at work. Kinder Care was paid $4,200 for the care of Darci and
$3,600 for the care of Amber. Kinder Care is located at 7112 Glenview Avenue, Sugar
Land, Texas 77069 (EIN 45-6159819; phone number 713-480-6666). Care for Darci and
Amber was provided at the Kinder Care’ location.
16. Mark and Marci made timely estimated Federal income tax payment of $16,000 for the year
($4,000 each quarter; paid on April 15, June 15, September 15, 2022, and January 15,
2023).
17. If preparing the return with a professional tax preparation software for which you are
considered a paid preparer, you may need to complete form 8867 (Paid Preparer’s Due
Diligence Checklist). If so, assume you have interviewed Mark and Marci and asked the
appropriate questions and obtained appropriate documentation to support the income,
deductions, and credits claimed on the return, including the couple’s filing status.
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 18. If your software asks for an ERO number, please enter a 5-digit number of your choice.
Also, select “non-paid preparer” on part V (Return Preparer and Third-Party Designee
Information) of the Information Worksheet. This will eliminate error messages regarding
the preparer and preparer’s code, as well as avoid messages regarding form 8867 (Paid
Preparer’s Due Diligence Checklist).
Assignment:
Complete the Martin's Federal income tax return for 2022 (since 2023 is not available as yet).
Assume that Mark and Marci Martin are filing their return on time (before April 18, 2023).
Allow their tax refund to be mailed to them rather than using electronic direct deposit or applying
it to their 2022 taxes. In preparing the return, you will need to use forms 1040, 2441, 4797, 8812,
4952, 8995, 4562 and schedules 1, 2, 3, A, B, C, D, and SE. If you are preparing the return as a
tax professional, you will also need to include form 8867. The total tax return will be over 20
pages plus estimated tax vouchers. Do not include estimated tax vouchers or statements detailing
tax items in your submission.

Submit a PDF copy of your completed tax return for Mark and Marci Martin via Canvas. Submit
the return as you would file it with the IRS. Only include forms that would be submitted to the
IRS if you were to mail the return. Do not submit the client copy of the return, input sheets, and
taxpayer worksheets.

The project should be submitted individually. You may work in groups but submit your work
individually.

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