tax case problem for 1st year tax class

[schirallicpa]

Hello everyone:

I am teaching a tax class this semester as an adjunct at Alfred University. I am considering having the students do a tax case study as a homework project. Wondered if anyone had suggestions.

They are mostly juniors and acctg majors. This is their first tax class. We are concentrating on individuals, and just brushing corps and partnerships late in the semester.

I appreciate any input.

[Pacun]

It depends on what you want them to learn while in your class. If you want them to write a research paper, give a lot of little subjects such as “Education credits for 2010”, “Deductible expenses on schedule A” “Schedule E deductible expenses”, “Retirement plans for individuals”. Etc. and ask them to pick a subject and write a paper.

If you want them to learn how to prepare a simple return, I would give them a case for year 2010 like this one.

A full time sophomore in your university made $30,000 from January to August, then went to school full time and tuition paid for 2010 was $1,500, required books cost $600. Dorm cost was $2,000. Computer for school work was $1,000 and he paid $300 in tutoring for harder classes. He opened an IRA and contributed $1,000 in November 2010 and he made another contribution of $1,500 in March 2011. Both contributions were for 2010. In August 2010, he contributed $2,000 to his ROTH IRA.

student is single, US Citizen, 22 years old and provided more than 50% to his own support but his parents paid his tuition, books and computer. His W-2 shows that he was covered by a retirement plan and Box 1: $30,000, box 2: 3,000, Box17, (state taxes paid) $1,250

If you want to make it harder, give Schedule A expenses that won't pass the standard deduction and maybe a little schedule C income and expenses.

For schedule A, you can say... student paid $500 to have his taxes prepared ($300 for his personal return and $200 for preparing his schedule C), donated $500 to the US Red Cross and gifted $10,000 to his uncle. He spent $3,000 in deductible medical expenses.

For schedule C, you can state: Student had his own business as a computer technician and he was paid cash $3000 and $10,000 in checks he was provided 1099s for the amount of $7,000 which was already included on those amount above. For his clients, he purchased, 2 computer for $1,400 each, 3 hard drives, for a total of $350, memory for $80, a motherboard for $85 and his business mileage were 516 miles. He spent $1,800 in newspaper ads and his business donated $900 to his church to promote good will.

The final question should be... maximizing his legal refund, or paying the least legal taxes, what is the amount of his refund or amount due on his return

You should give 15% if you come up with correct answer and 2-5 points for each entry entered on the correct spot. You should have 15% discretionary points for people who verbally defend and explain certain entries.

Remember that some of your students will go to their tax preparer and pay to have the return prepared. You should collect papers and ask questions depending on what they entered on the return and use the 15% discretionary points to be fair.

If you want to discuss the final answer, please send me a personal message since your students might join this forum

[schirallicpa]

you're awesome

[JohnH]

Throw in a few W-2G's, a gambling diary, and a couple of cash in/cash out casino reports for extra points.