Tax Return-Individual Number Five (after Chapter 12) Instructions: Please complete the required federal individual income tax return forms for Joseph and Diana Cohen for the 2013 tax year. 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. Joseph and Diana Cohen live in Pleasantville, New Jersey. Joseph is the Vice President of Sales at a small start-up company. Diana is a former advertising executive who currently consults with former clients. She also serves on the board of directors of an advertising company. The Cohens have three children: Rebecca (age 18), Alan (age 15), and David (age 12). In January, Rebecca left home to attend a liberal arts college. All three children qualify as Joseph and Diana’s federal income tax dependents. The Cohens plan to file a joint tax return. The Cohens provided the following information: · Joseph’s social security number is 598-94-2583 · Diana’s social security number is 301-52-2942 · Rebecca’s social security number is 887-44-8710 · Alan’s social security number is 810-42-9092 · David’s social security number is 855-11-3021 · The Cohen’s mailing address is 85 North Maple Drive, Pleasantville, New Jersey 08233 Joseph Cohen reported the following the following information relating to his employment during the year: Company Gross Wages Federal Income Tax Withholding State Income Tax Withholding Alternative Energy $115,325 $29,230 $14,400 The above amounts do not reflect any income items described below. Joseph’s employer withheld all payroll taxes it was required to withhold. Diana Cohen received the following revenue during the year (she uses the cash method of accounting). Consulting revenue reported to her on a Form 1099-MISC, Box 7 High-end Retail$32,000 Jensen’s Health Products$8,500 Strategic Solution s$3,750 Board of director compensation reported to her on a Form 1099-MISC, Box 7 Natural Sunshine, Inc.$6,500 During the year, Diana paid the following business expenses: Consultant-related: Airfare$2,900 Hotel$1,450 Meals$390 Parking$320 Diana drove 290 business miles for her consulting-related activities (she has documentation to verify) Board of Director-related: Meals$125 Hotel$225 Diana drove 315 business miles for her board of director activities (she has documentation to verify) Neither of Diana’s business activities s required the filing of Form(s) 1099 to report payments she made during the tax year. In addition, Ms. Cohen drove a 2011 Lexus purchased on January 1, 2011 for all of her business mileage. She drove the vehicle a total of 10,605 miles during the year for all purposes. Diana has written documentation to support the mileage amounts. She also has access to another vehicle for personal purposes. The Cohens also received the following during the year: Interest income from First Bank of New Jersey$320 Interest income from Patterson ...

1. Tax Return-Individual Number Five (after Chapter 12)
Instructions:
Please complete the required federal individual income tax
return forms for Joseph and Diana Cohen for the 2013 tax year.
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.
Joseph and Diana Cohen live in Pleasantville, New Jersey.
Joseph is the Vice President of Sales at a small start-up
company. Diana is a former advertising executive who
currently consults with former clients. She also serves on the
board of directors of an advertising company. The Cohens have
three children: Rebecca (age 18), Alan (age 15), and David (age
12). In January, Rebecca left home to attend a liberal arts
college. All three children qualify as Joseph and Diana’s
federal income tax dependents. The Cohens plan to file a joint
tax return. The Cohens provided the following information:
· Joseph’s social security number is 598-94-2583
· Diana’s social security number is 301-52-2942
· Rebecca’s social security number is 887-44-8710
· Alan’s social security number is 810-42-9092
· David’s social security number is 855-11-3021
· The Cohen’s mailing address is 85 North Maple Drive,
Pleasantville, New Jersey 08233
Joseph Cohen reported the following the following information
relating to his employment during the year:
Company
Gross Wages
Federal Income Tax Withholding

2. State Income Tax Withholding
Alternative Energy
$115,325
$29,230
$14,400
The above amounts do not reflect any income items described
below. Joseph’s employer withheld all payroll taxes it was
required to withhold.
Diana Cohen received the following revenue during the year
(she uses the cash method of accounting).
Consulting revenue reported to her on a Form 1099-MISC, Box
7
High-end Retail$32,000
Jensen’s Health Products$8,500
Strategic
Solution
s$3,750
Board of director compensation reported to her on a Form 1099-
MISC, Box 7
Natural Sunshine, Inc.$6,500

3. During the year, Diana paid the following business expenses:
Consultant-related:
Airfare$2,900
Hotel$1,450
Meals$390
Parking$320
Diana drove 290 business miles for her consulting-related
activities (she has documentation to verify)
Board of Director-related:
Meals$125
Hotel$225
Diana drove 315 business miles for her board of director
activities (she has documentation to verify)
Neither of Diana’s business activities s required the filing of
Form(s) 1099 to report payments she made during the tax year.
In addition, Ms. Cohen drove a 2011 Lexus purchased on

4. January 1, 2011 for all of her business mileage. She drove the
vehicle a total of 10,605 miles during the year for all purposes.
Diana has written documentation to support the mileage
amounts. She also has access to another vehicle for personal
purposes.
The Cohens also received the following during the year:
Interest income from First Bank of New Jersey$320
Interest income from Patterson, New Jersey School District$200
Interest income from U.S. Treasury Bond$350
Interest income from General Mills corporate bond$400
Qualified dividend income from Rio Tinto$1,500
Qualified dividend income from Microsoft$750
Qualified dividend income from Cooper Tire$200
Qualified dividend income from Cardinal Health$425
Qualified dividend income from Union Pacific$140
Qualified dividend income from Procter & Gamble$190
Qualified dividend income from PepsiCo$225
Qualified dividend income from Kellogg$200
Qualified dividend income from Abbott Labs$275
Qualified dividend income from 3M$350
Dividend income (not qualified) from China Fund$2,000
The Cohens did not own, control or manage any foreign bank

5. accounts nor were they a grantor or beneficiary of a foreign
trust during the tax year.
The Cohens had the following activity in their brokerage
account during the year (all transactions were reported on a
form 1099-B with Box A checked):
Sold 2,000 shares of Microsoft7/1/13$22,500
Sold 75 shares of Apple4/15/13$28,750
Sold 350 shares of Cooper Tire10/14/13$14,700
Sold 1,000 shares of Cardinal Health9/3/13$35,000
Sold 50 shares of Union Pacific1/7/13$2,750
Purchased 100 shares of Procter & Gamble7/10/13$7,700
Purchased 75 shares of Apple4/18/13$29,000
Purchased 350 shares of Cooper Tire11/1/13$14,000
Purchased 350 shares of PepsiCo5/14/13$32,000
Purchased 300 shares of Kellogg10/14/13$21,000
Relevant tax basis/holding period information related to sales of
securities in the current year:
Purchased 2,000 shares of Microsoft on 5/1/13 for $21,000
Purchased 200 shares of Apple on 3/8/2011 for $90,000
Purchased 300 shares of Cooper Tire on 1/12/2010 for $9,000

6. Purchased 50 shares of Cooper Tire on 6/28/13 for $2,000
Received 1,000 shares of Cardinal Health from Diana’s father as
a gift on 10/10/97. The donor’s basis was $7,000. Fair market
value of the stock at the date of the gift was $41,000
Purchased 100 shares of Union Pacific on 9/5/12 for $6,000
The Cohens have a $43,000 long-term capital loss carryover
from their prior tax year.
The Cohens received a New Jersey state income tax refund of
$400 in May of 2013. The Cohens received the refund because
they had overpaid their New Jersey state individual income tax
in 2012. On their 2012 Federal income tax return, the Cohens
deducted and received tax benefit for all of the state tax income
taxes they paid in 2012.
Diana is a 10% owner in an advertising agency named Bright
Ideas (“BI”) (EIN 20-1234567). BI is a Subchapter S
corporation. The company reported ordinary business income
for the year of $150,000. Sarah acquired the stock several years
ago. Her basis in the stock before considering her 2013 income
allocation was $92,000. Sarah is a passive owner with respect
to this entity.
Diana is also a 20% owner in Natural Sunshine, Inc. (“NS”)

7. (EIN 24-9876543). NS is a Subchapter S corporation. The
company reported an ordinary business loss for the year of
($80,000). Sarah acquired the stock several years ago. Her
basis in the stock before considering her 2013 loss allocation
was $45,000. Sarah is a passive owner with respect to this
entity.
Joseph received 5,000 shares of restricted (common) stock from
his employer on July 1, 2013. The terms of the restricted stock
grant are such that if Joseph is still employed by Alternative
Energy on July 1, 2018 the entire 5,000 shares will vest and
become his property. Joseph, upon the advice of his tax
advisor, prepared and filed an IRC Section 83(b) election on
July 8, 2013. On July 1, 2013, shares were valued at $5 per
share. Joseph estimates the value of the shares in five years
will be at least $150 per share. Joseph notified Alternative
Energy about the IRC Section 83(b) election in a timely manner.
None of the income tax consequences of this restricted stock
grant were included in the $115,325 reported as part of Joseph’s
gross wages (see above).
In May, Joseph was injured in a home accident. The injury
prevented Joseph from working for about a month. During this
time, Joseph received $15,000 in disability payments
attributable to a disability insurance policy. The disability

8. policy premiums were paid on Joseph’s behalf as a nontaxable
fringe benefit.
The Cohens paid the following expenses during the year:
Dentist (unreimbursed by insurance)$1,500
Doctors (unreimbursed by insurance)$ 2,425
Prescriptions (unreimbursed by insurance)$ 675
Real property taxes on residence$7,525
Vehicle property tax based upon value$1,250
Mortgage interest on principal residence$12,550
Margin interest paid to broker$600
Contribution to United Way$2,000
Contribution to American Cancer Society$5,000
Contribution to neighborhood drive to oppose development
project$500
Contribution to the Temple Mount Synagogue$12,000
Fee paid to Mouser, Johnson, and Hintze CPAs for tax
preparation$450
The Cohens also donated clothing, electronics, furniture and
other household goods to the Salvation Army of Pleasantville,
New Jersey on April 15, 2013. Estimated thrift value of the
goods donated is $275.

9. Miscellaneous Information
On September 1, the Cohens paid $200 in foreign taxes
attributable to the dividend received from the China Fund.
During the year, the Cohens paid a portion of Rebecca’s tuition
to attend The College of Liberal Arts of New Jersey (CLA).
They also purchased Rebecca’s school books. Rebecca attended
the spring/summer and the fall semesters as a full-time student.
In total, the Cohens paid $9,000 for tuition and $2,000 for
books. Rebecca used $6,000 from a scholarship she received
from CLA to pay the remaining $6,000 of tuition for the year.
Rebecca was not required to perform any services as a condition
of accepting the scholarship. Rebecca was not employed during
the year. CLA’s address and employer identification number
(EIN) is as follows:
The College of Liberal Arts of New Jersey
65 Ivory Tower
Penns Grove, NJ 08069
EIN- 22-5698324
The Cohens would like to contribute to the Presidential Election
Campaign. The Cohens would also like to receive a refund (if
any) of tax they may have overpaid for the year. Their

10. preferred method of receiving the refund is by check.
4
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11. Efficient market
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12. Project management
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Forecasting and demand management
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