Tax Project

1. Use the template (last page of this document) to record your response to each of your neighbor’s questions.
2. Use the third column to note anything that you would need to record on their tax return.
3. Record any event (and amount if possible) that should be considered for their taxes.
4. Be complete and comprehensive in your responses

Additional Facts:

1. You move in July 1, 2021.
2. You need to name your assignment with your real name and you can add a project name like “House of Ted” or “Chateau de Martha”  
   Day 1:
   You and your loved ones move into a new home with a great open backyard. It has a great fire pit. The next Friday night, you go hang out at the fire pit and your next-door neighbors stop by and introduce themselves.
   In the introductions, they tell you that their names are Rudy and Sarah Stowe. Both Rudy and Sarah work. They have 3 children, Charlie (Sarah’s son from her first marriage), age 18, Lizzy, age 11 and Zac, age 6. Charlie is in his first year of college. Rudy is super impressed that you have a career in tax. He tells you how he doesn’t understand why our country doesn’t have a flat tax to make paying taxes easier. How do you respond?
   Day 2:
   Sarah stops by to give you some home baked banana bread as a welcome to the neighborhood gift. While she is there, she mentions that she is so proud of Charlie because he was just awarded a college scholarship. She says that she isn’t sure if it will be taxable to him though. What questions would you ask to see if it is taxable? (Record hypothetical answers she provides so you can be prepared to do their tax return at year end).
   Day 3:
   Rudy joins you out at the fire pit after he gets home from a long day of work. He works as a sales person and spends much of the day driving to see customers. Today, his company awarded him a $300 bonus and vase with the company name on it for his 20 year anniversary of working for the company. He grumbles about wondering if he will have to pay tax on it. What do you say?
   Day 4:
   You are out getting the mail and Sarah pulls up. She gets of her car and is crying. Her mom just died and her dad had already died last year of Covid. She says that she is the executor of the estate and wishes that she weren’t. She shares that when her dad died, it took up until last month to finalize the estate where Sarah and each of her siblings received a $10,000 inheritance. Some of the time delay was the result of her siblings complaining that Sarah took compensation from the estate of $50,000 in March for her services.
   It is 4th of July. Charlie keeps you up until 2:00 am shooting off fireworks from possibly your fire pit.
   Day 5:
   On your way to work, you go to Starbucks for a grande coffee because you didn’t sleep well. You see Sarah there who tells you that the person in front of her “paid it forward” and saved her $10 for her coffee and muffin. She doesn’t pay it forward for you though.
   Day 6:
   Sarah pops by to complain about her siblings. She says that they are telling her that she will be in trouble with the IRS. She tells you that she doesn’t think that is true and she doesn’t even need to think about taxes until after the first part of the year when she is getting stuff together for her tax return. Is she right?
   Day 7:
   You hear the doorbell but decide to not answer because you need a break from your neighbors.
   Day 8:
   You hear Charlie outside boasting to your other neighbors that he found a expensive watch (worth $1,000) and $500 in cash on his way home. He says he isn’t going to turn it into the police.
   Day 9:
   Sarah tells you that she was named as the beneficiary of her mother’s life insurance policy and that she received a check for $250,000. They might use it to put in a pool.
   Day 10:
   You spend the afternoon making a gourmet dinner using the tomatoes and basil that you grew in your own garden.
   Day 11:
   When sitting out at the firepit, Sarah tells you about one of her employees at the small company that she owns. This employee, Lala has fallen on hard times. Sarah feels badly for her so she loans Lala $25,000, no interest and asks Lala to pay the loan back in a few years. You wonder is Sarah will ever get the money back.
   Day 12:
   You hear arguing from Rudy and Sarah’s house.
   Day 13:
   You find out that the arguing was with Sarah’s X-husband. He had just paid Sarah the last alimony check of $1,000 per month this past June. That was the same month that he stopped paying child support of $400 a month since that is when Charlie turned 18.
   Day 14:
   You see an Uber pick up your neighbors as they leave on a two-week vacation. Whew! 
   Day Consideration for tax/notes/questions to neighbor Responses from neighbor/other notes Amount and where included on return