• Tim B. Klassen and Natalie P. Klassen are married. They are both under 65 years of age.
They live at 1507 Rose Lane, Dallas, TX 75241.
• Tim’s Social Security Number is 123-45-6789. His birthdate is May 5, 1978.
• Natalie’s Social Security Number is 123-45-6788. Her birthdate is February 12, 1979.
• Tim and Natalie both do want $3 to go to the Presidential Election Campaign Fund.
• Tim and Natalie have a 16 year old son, Liam D. Klassen, who resides with them.
Liam’s Social Security Number is 123-45-6787. His birthdate is January 25, 2006.
• Tim owns and operates an auto repair shop called Klassen Auto Repair (a
sole proprietorship, reported on Schedule C).
o The business address is 6523 Pearl Dr., Dallas, TX 75241.
o His Employer ID Number (EIN) is 98-7654321.
o He uses the cash method of accounting and maintains no inventory.
o He did not make any payments in 2021 that would require him to file Form 1099.
o His revenues and expenses for 2021 are as follows:
Gross receipts $491,800
Cost of goods sold (based on
purchases for the year)
$254,200
Wages paid to employees $88,450
Tax expense (payroll taxes) $6,766
1 Alternatively, you may use another tax preparation software program, as long as it is capable of
preparing Form 1040 with Schedule C/self-employment, itemized deductions, and property
transactions/investment income. Examples of tax preparation software companies besides Intuit
ProConnect include: Tax Slayer, Tax Act, Intuit Turbo Tax, Jackson Hewitt, and H&R Block. As stated
in the syllabus for this course, if you choose not to use Intuit ProConnect Tax Online, you must arrange
to use/purchase equivalent tax preparation software on your own.
From Syllabus: “There are various different tax return preparation programs that are suitable for
completing the project. The recommended program is Intuit ProConnect Tax Online, which can
be obtained for free from Intuit Education (https://www.intuit.com/partners/educationprogram/products/proconnect-tax-online/student-signup/). You must use your UNT Dallas email
address when signing up for student access to Intuit ProConnect Tax Online. If you choose not to
use the recommended program, you must arrange to use/purchase equivalent tax preparation
software on your own in order to complete the project (i.e. the instructor is not responsible for
advising the student on alternative tax preparation software).”
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Rent expense (building) $36,000
Utilities $9,800
Telephone $2,650
Advertising $1,230
Accounting fees $3,000
Legal fees $1,000
Supplies $1,525
o Klassen Auto Repair will also have Depreciation Expense. The shop has the
following depreciable property, which has been depreciated according to a regular
MACRS schedule, and no § 179 or additional first-year depreciation has been or
will be taken:
▪ Diagnostic Equipment (MACRS 7-year % method) with a cost of $50,000
was placed in service on June 15, 2019.
▪ Diagnostic Equipment (MACRS 7-year % method) with a cost of $50,000
was placed in service on May 15, 2018.
• Natalie is a consultant at JKL LLP (EIN: 12-3456786). JKL LLP’s address is: 847
Block Street, Dallas, TX 75241. Natalie received a 2021 Form W-2 from her employer
that included the following information:
o Box 1 (Wages): $66,000
o Box 2 (Federal income tax withheld): $5,800
o Box 3 (Social Security wages): $66,000
o Box 4 (Social Security tax withheld): $4,092
o Box 5 (Medicare wages): $66,000
o Box 6 (Medicare tax withheld): $957
• The Klassens also received the following income during 2021:
o Dividend income (qualified dividends) (enter the same amount for both “Ordinary
Dividends” and “Qualified Dividends”)
▪ Swan, Inc. $850
▪ Wren, Inc. $600
o Interest income
▪ First Bank $187
▪ Second Bank $38
• During the year, the Klassens had the following property transactions:
o Sold 100 shares of Blue, Inc. stock for $8,000 on January 8, 2021. The 100 shares
were purchased for $3,800 on May 5, 2016.
o Sold 100 shares of Red, Inc. stock for $10,250 on March 10, 2021. The 100 shares
were purchased for $9,300 on January 5, 2021.
o Sold 100 shares of Orange, Inc. stock for $6,800 on July 15, 2021. The 100 shares
were purchased for $9,700 on June 8, 2017.
• Natalie paid $1,380 in student loan interest to Navient Education.
• Tim contributed $3,800 to his Individual Retirement Account (IRA). Natalie contributed
$2,700 to her IRA. (both “traditional” IRAs)
• The Klassens’ potential itemized deductions are as follows:
o Property taxes on residence $9,500
o Mortgage interest on residence $12,800
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o Charitable contributions $4,300 (cash/check)
o Sales taxes Use State and Local General Sales Tax
Deduction (not actual sales tax paid). Rate in
Dallas is 8.25%. (8.25% rate is comprised of
6.25% rate for the state of Texas and 2%
local (Dallas) rate. Be aware that your
program may pre-fill the state rate. On Intuit
ProConnect, you will enter “0.02” as the
“Local rate” and the program adds the state
portion automatically.)
• In addition to the federal income tax withholdings listed on Natalie’s W-2, the
Klassens made the following estimated tax payments for 2021:
o $3,750 on April 8, 2021
o $3,750 on June 10, 2021
o $3,750 on September 12, 2021
o $3,750 on January 5, 2022