The document provides detailed instructions for completing the federal individual income tax return for Joseph and Diana Cohen for the 2013 tax year, including personal information, income sources, and applicable deductions. Joseph is an employee with specific wages and tax withholdings, while Diana earns consulting revenue and incurs business expenses. The Cohens have dependents and various investment incomes, along with contributions and deductions to be considered for their joint tax filing.

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
·

2. 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

3. 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

4. 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.

5. 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

6. 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
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 Microsoft 7/1/13
$22,500
Sold 75 shares of Apple
4/15/13 $28,750
Sold 350 shares of Cooper Tire
10/14/13 $14,700

7. Sold 1,000 shares of Cardinal Health
9/3/13 $35,000
Sold 50 shares of Union Pacific
1/7/13 $2,750
Purchased 100 shares of Procter & Gamble
7/10/13 $7,700
Purchased 75 shares of Apple
4/18/13 $29,000
Purchased 350 shares of Cooper Tire
11/1/13 $14,000
Purchased 350 shares of PepsiCo
5/14/13 $32,000
Purchased 300 shares of Kellogg
10/14/13 $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
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

8. 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”)
(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

9. 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
policy premiums were paid on Joseph’s behalf as a nontaxable
fringe benefit.
The Cohens paid the following expenses during the year:

10. 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

11. 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.
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:

12. 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
preferred method of receiving the refund is by check.