prepare a tax return
Roberta Santos, age 41, is single and lives at 120 Sanborne Avenue, Springfield, IL 60781. Her Social Security number is 123-45-6780. Roberta has been divorced from her former husband, Wayne, for three years. She has a son, Jason, who is 17, and a daughter, June, who is 18. Jason’s Social Security number is 111-11-1112, and June’s is 123-45-6788. Roberta has never owned or used any virtual currency. She does not want to contribute $3 to the Presidential Election Campaign Fund.
Roberta, an advertising executive, earned a salary from ABC Advertising of $80,000 in 2019. Her employer withheld $9,000 in Federal income tax and $3,100 in state income tax.
Roberta has legal custody of Jason and June. The divorce decree provides that Roberta is to receive the dependency deductions for the children. Jason lives with his father during summer vacation. Wayne indicates that his expenses for Jason are $5,500. Roberta can document that she spent $6,500 for Jason’s support during 2019. In prior years, Roberta gave a signed Form 8332 to Wayne regarding Jason. For 2019, she has decided not to do so. Roberta provides all of June’s support.
Roberta’s mother died on January 7, 2019. Roberta inherited assets worth $625,000 from her mother. As the sole beneficiary of her mother’s life insurance policy, Roberta received insurance proceeds of $300,000. Her mother’s cost basis for the life insurance policy was $120,000. Roberta’s favorite aunt gave her $13,000 for her birthday in October.
On November 8, 2019, Roberta sells for $22,000 Amber stock that she had purchased for $24,000 from her first cousin, Walt, on December 5, 2013. Walt’s cost basis for the stock was $26,000, and the stock was worth $23,000 on December 5, 2015. On December 1, 2019, Roberta sold Falcon stock for $13,500. She had acquired the stock on July 2, 2015, for $8,000.
An examination of Roberta’s records reveals that she received the following:
From her checkbook records, she determines that she made the following payments during 2019:
Because she did not maintain records of the sales tax she paid, she calculates the amount from the sales tax table to be $994.
Calculate Roberta’s net tax payable or refund due for 2019. Use the appropriate forms and schedules. Suggested software: ProConnect Tax Online.
The following information should be helpful in your preparation of the tax return.
Adjusted gross income $109,850 Itemized deductions $22,200
Taxable income $86,590
(4) Check forms: (please include in your return):
a. Per the syllabus, this manual return is 10% of the grade; i.e., 40 points, since the four exams are worth 75 points each of the 400 possible points.
b. Actual maximum, manual return, 43 points (3 points extra credit)
c. Forms: 1040 pages 1 & 2; Schedules 1, 3, A, B, D; E p.2; Form 8949 pt.2; Form 8995; Form 8582 (not required as part of assignment); Qualified Dividends and Capital Gain Tax Worksheet—Line 12a in 1040 Instructions
a. Please use the sequence numbers in the upper right-hand corner of the official IRS forms for the proper order
b. Do not calculate next year’s estimates or any late filing penalty or interest.
c. There is a QBI deduction because there is QBI on the Schedule E page 2.
d. Dividends are ordinary and qualified. Long-term capital gains are subject to special tax rates.