1 Part 1 of 2 Required information Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo) (The following information applies to the questions displayed below.) During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: 10 points Broker's Commission Paid at Time of Purchase $ 100 300 1,300 550 No-load funds Investment Assets Date Acquired Purchase Price 380 shares of IBM common 11/22/2018 $ 10,420 200 shares of IBM common 4/3/2019 43,320 3,880 shares of Apple preferred 12/12/2019 154,680 2,100 shares of Cisco common 8/14/2020 53,280 420 shares of Vanguard mutual fund 3/2/2021 15,400 *No commissions are charged when no-load mutual funds are bought and sold. eBook Print Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021: G References Broker's Commission Paid at Investment Assets Date Sold Sale Price Time of Sale 300 shares of IBM common 5/6 $ 14,400 $ 100 3,880 shares of Apple preferred 10/5 222, 100 2,000 2,100 shares of Cisco common 8/15 63,320 650 451 shares of Vanguard mutual fund 12/21 16,400 No-load fund *No commissions are charged when no-load mutual funds are bought and sold. The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $14,300 on the Form 1099-B they received. In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2021 The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021. . In 2014, Mrs. Howell loaned $6,700 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $3,000 short-term capital loss carryover and a $5,500 long-term capital loss carryover from prior years. The Howells did not instruct their broker to sell any particular lot of IBM stock. The Howells earned $3,350 in municipal bond interest, $3,350 in interest from corporate bonds, and $4,700 in qualified dividends. Assume the Howells have $147,500 of wage income during the year. Comprehensive Problem 07-63 Part a (Algo) a. Use Form 8949 and page 1 of Schedule D to compute net long-term and short-term capital gains. Then, compute the Howells' tax liability for the year (ignoring the alternative minimum tax and any phase-out provisions) assuming they file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $26,000. Assume that asset bases are reported to the IRS Mr. Howell social security number: 412-34-5670 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) Complete this question by entering your answers in the tabs below. Form 8949 PG1 Form 8949 PG2 Schedule D Form 8949 Schedule D. 1 Required information Mr. Howell social security number: 412-34-5670 Part 1 of 2 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) 10 points Complete this question by entering your answers in the tabs below. Form 8949 PGI Form 8949 PG2 Schedule D eBook Form 8949 Page 1 and 2. Form 8949 Sales and Other Dispositions of Capital Assets OMB No 1545-0074 Print 2020 References Department of the Treasury - Internal Revenue Service Go to www.is gowForm6948 for instructions and the latest information File with your Schedule to list your transactions for lines 11. 2. 3. .. and 10 of Schedule Attachment Sequence No. 12A Names) shown on retum Social security number or taxpayer identification number Mr. and Mrs. Howell 412-34-5670 Before you check Box A, B or below see whether you received any Form (2) 1099-B or substitute statements) from your broker A substitute ) . statement will have the same information as Form 1099-8. Either will show whether your basis (usualy your goat was reported to the IRS by your broker and may even tell you which box to check Part 1 Short-Term. Transactions involving capital assets you held 1 year or less are generally short term see instructions. For long-term transactions, see page 2 Note: You may aggregate all short-term transactions reported on Form(s) 1000- showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the total directyon Schedule D, Ine 12you arent required to report these transactions on Form 2040 (se instructions) You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 2040, page 1 for each applicable box. If you have more short-term transactions than wil fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. OA) Short-term transactions reported on Form(s) 1000-8 showing basis was reported to the IRS (see Note above) B) Short-term transactions reported on Form(s) 1000-8 showing basis wasn't reported to the IRS OC) Short-term transactions not reported to you on Form 1000-8 1 (a) Description of property Example: 100 sh.XYZ Co.) (e) Cost or other bass See the Note below and see Column() in the separate instructions th) Gain or (1059) Subtract column (e) from column(d) and combine the result with column() b) Date acquired (Mo.. day yr.) mars Young amount in column (g) enter a code in column aan See the separate instructions (Code(s) from ) Amount of instructions adjustment (0) Date old or dispecedProceeds (sales price) of (Mo., diay yo yr.) see instructions ( various 18 40 10,300 451 sh Vanguard mutual fund Nonbusiness bad debt 12/21/2021 12/31/2021 various 4,700 2 Totals. Add the amounts in columns (d), (e)) and h) (subtract . ) negative amounts). Enter esch total here and include on your Schedule D. line 1b (if Box A above is checked. line 20 Box Babove is checked), or line 3 0f Box C above is checked 18.400 23.000 Note: If you checked Box A above but the basis reported to the IRS was incorrect enter in column) the basis as reported to the IRS and enter an adjustment in column() to correct the basis See Column() in the separate instructions for how to figure the amount of the adjustment For Paperwork Reduction Act Notice, see your tax return instructions Cat No. 37768Z THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 2021 McGraw-Hill Education Form 8949 (2020) Form 8949 PG1 Form 8949 PG2 > 1 Required information Part 1 of 2 Mr. Howell social security number: 412-34-5670 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) 10 points Complete this question by entering your answers in the tabs below. Form 8949 PG1 Form 8949 PG2 Schedule eBook Form 8949 Page 1 and 2. . Print References Form 8049 (2020) Attachment Sequence No. 12A Page 2 Names) shown on return. Name and SSN or taxpayer identification no. not required shown on other side Social Security number or taxpayer identification number Mr. and Mrs. Howell 412-34-5670 Before you check Box D. E, or below see whather you received any Form() 1099-8 or substitute statement from your broker. A substitute statement will have the same information Form 1099-8. Either will show whether your basis (ueually your cost was reported to the IRS by your as . ) broker and may even tell you which box to check Part II Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see instructions). For short-term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1000-8 showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D line 8a; you aren't required to report these transactions on Form 8040 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (F) Long-term transactions not reported to you on Form 1099-B 1 Adjustment, if any, to gain or loss. If you enter an amount in column (g), enter a code in column (1) See the separate instructions. (a) Description of property (Example: 100 sh.XYZ Co.) (b) Date acquired (mm/dd/yyyy) ) (c) Date sold or disposed (6) Proceeds (sales of (mm/dd/yyyy) price) (see instructions) (e) Cost or other bass. See the Nota below and see Column(e) in the separate instructions (h) Gain or (oss) Subtract column from column (d) and combine the result with column(e) Code(s) from instructions (9) Amount of adjustments 14,300 300 sh IBM common 3,000 sh Apple preferred 12.100 sh Cisco common 11/22/2018 12/12/2010 08/14/2020 05/08/2021 10/05/2021 08/15/2021 220,100 62.670 10,520 43,620 155,300 2 Totals. Add the amounts in columns (d), (e). ) and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 86 (if Box D above is checked), line (if Box E above is checked), or line 10 (if Box F above is checked) 297,0701 200,440 87,830 Note: If you checked Box D above but the basis reported to the IRS was incorrect enter in column (e) the basis as reported to the IRS, and enter and adjustment in column(a) to correct the basis See Column() in the separate instructions for how to figure the amount of the adjustment THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education Form 8949 (2020) 1 Required information Mr. Howell social security number: 412-34-5670 Part 1 of 2 2 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) 10 points Complete this question by entering your answers in the tabs below. Form 8949 PG1 Form 8949 PG2 Schedule D eBook Form 8949 Schedule D. Print 2020 References SCHEDULED Capital Gains and Losses OMB No. 1545-0074 (Form 1040) Attach to Form 1040 1040-SR or 1040-NR. Department of the Treasury Go to www.irs.gov/Schedule for instructions and the latest information Internal Revenue Service (99) ) Use Form 8949 to list your transactions for lines 1b. 2.3. 8b, 9, and 10. , , Atachment Sequence No. 12 Name() shown on return Your social security number Mr. and Mrs. Howell 412-34-5670 Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes" attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss Parti Short-Term Capital Gains and Losses-Generally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the lines below. (g) Adjustments to (d) Proceeds (sales d (e) Cost (or other gain or loss from (h) Gain or loss). Subtract column (e) from price) basis) . This form may be easier to complete if you round off cents to whole dollars. Form(s) 8940. Particolumn d) and combine the result with column (9) line 2. column 1a Totals for all short-term transactions reported on Form 1099-B for which B basis was reported to the IRS and for which you have no adjustments see instructions). However, if you choose to report all these transactions on Form 8940. leave this line blank and go to line 1b 16 Totals for all transactions reported on Form(s) 8949 with Box Achecked 16.4001 23,000 (6.600) 2 Totals for all transactions reported on Form(s) 8040 with Box Bchecked 3 Totals for all transactions reported on Form(s) 8949 with Box C checked 4 Short-term gain from Form 6252 and short-term gain or loss) from Forms 4884.6781 and 8824 5 Net short-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions 3.000 7 Net short-term capital gain or loss). Combine lines la through in column th). If you have any long-term capital gains or losses, go to Part II below. Otherwise go to Part Ill on the back (3.600) Part II Long-Term Capital Gains and Losses-Generally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines below. (g) Adjustments to (d) Proceeds (sales le) Cost (or other gain or loss from (h) Gain or loss) Subtract column (e) from e basis) price) This form may be easier to complete if you round off cents to whole dollars. Form(s) 8040. Part Column (d) and combine the result with column) line 2 column] 8a Totals for all long-term transactions reported on Form 1000-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8948, leave this line blank and go to line 3 8b Totals for all transactions reported on Form(s) 8040 with Box D checked 297,070 209.440 87,630 Totals for all transactions reported on Form(s) 894 with Box Echecked 10 Totals for all transactions reported on Form(s) 8040 with Box Fchecked 11 Gain from Form 4707, Part I: long-term gain from Forms 2439 and 6252, and long-term gain or loss) from Forms 4684.6781, and 3824 11 12 Net long-term gain or loss) from partnerships, Scorporations, estates, and trusts from Schedule(s) K-1 12 13 Capital gain distributions. See the instructions 131 900 14 Long-term capital loss carryover. Enter the amount if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions (Enter as negative) 14 (5.500) 15 Net long-term capital gain or (less). Combine lines 8a through 14 in column (h). Then go to Part Ill on the back 15 83,030 For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 11338H Schedule D (Form 1040 or 1040-SR) 2020 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL, 2021 McGraw-Hill Education 1 Required information Part 1 of 2 Mr. Howell social security number: 412-34-5670 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) 10 points Complete this question by entering your answers in the tabs below. Form 8949 PG1 Form 8949 PG2 Schedule eBook Form 8949 Page 1 and 2. . Print References Form 8049 (2020) Attachment Sequence No. 12A Page 2 Names) shown on return. Name and SSN or taxpayer identification no. not required shown on other side Social Security number or taxpayer identification number Mr. and Mrs. Howell 412-34-5670 Before you check Box D. E, or below see whather you received any Form() 1099-8 or substitute statement from your broker. A substitute statement will have the same information Form 1099-8. Either will show whether your basis (ueually your cost was reported to the IRS by your as . ) broker and may even tell you which box to check Part II Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see instructions). For short-term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1000-8 showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D line 8a; you aren't required to report these transactions on Form 8040 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (F) Long-term transactions not reported to you on Form 1099-B 1 Adjustment, if any, to gain or loss. If you enter an amount in column (g), enter a code in column (1) See the separate instructions. (a) Description of property (Example: 100 sh.XYZ Co.) (b) Date acquired (mm/dd/yyyy) ) (c) Date sold or disposed (6) Proceeds (sales of (mm/dd/yyyy) price) (see instructions) (e) Cost or other bass. See the Nota below and see Column(e) in the separate instructions (h) Gain or (oss) Subtract column from column (d) and combine the result with column(e) Code(s) from instructions (9) Amount of adjustments 14,300 300 sh IBM common 3,000 sh Apple preferred 12.100 sh Cisco common 11/22/2018 12/12/2010 08/14/2020 05/08/2021 10/05/2021 08/15/2021 220,100 62.670 10,520 43,620 155,300 2 Totals. Add the amounts in columns (d), (e). ) and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 86 (if Box D above is checked), line (if Box E above is checked), or line 10 (if Box F above is checked) 297,0701 200,440 87,830 Note: If you checked Box D above but the basis reported to the IRS was incorrect enter in column (e) the basis as reported to the IRS, and enter and adjustment in column(a) to correct the basis See Column() in the separate instructions for how to figure the amount of the adjustment THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education Form 8949 (2020) 1 Required information Mr. Howell social security number: 412-34-5670 Part 1 of 2 2 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) 10 points Complete this question by entering your answers in the tabs below. Form 8949 PG1 Form 8949 PG2 Schedule D eBook Form 8949 Schedule D. Print 2020 References SCHEDULED Capital Gains and Losses OMB No. 1545-0074 (Form 1040) Attach to Form 1040 1040-SR or 1040-NR. Department of the Treasury Go to www.irs.gov/Schedule for instructions and the latest information Internal Revenue Service (99) ) Use Form 8949 to list your transactions for lines 1b. 2.3. 8b, 9, and 10. , , Atachment Sequence No. 12 Name() shown on return Your social security number Mr. and Mrs. Howell 412-34-5670 Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes" attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss Parti Short-Term Capital Gains and Losses-Generally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the lines below. (g) Adjustments to (d) Proceeds (sales d (e) Cost (or other gain or loss from (h) Gain or loss). Subtract column (e) from price) basis) . This form may be easier to complete if you round off cents to whole dollars. Form(s) 8940. Particolumn d) and combine the result with column (9) line 2. column 1a Totals for all short-term transactions reported on Form 1099-B for which B basis was reported to the IRS and for which you have no adjustments see instructions). However, if you choose to report all these transactions on Form 8940. leave this line blank and go to line 1b 16 Totals for all transactions reported on Form(s) 8949 with Box Achecked 16.4001 23,000 (6.600) 2 Totals for all transactions reported on Form(s) 8040 with Box Bchecked 3 Totals for all transactions reported on Form(s) 8949 with Box C checked 4 Short-term gain from Form 6252 and short-term gain or loss) from Forms 4884.6781 and 8824 5 Net short-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions 3.000 7 Net short-term capital gain or loss). Combine lines la through in column th). If you have any long-term capital gains or losses, go to Part II below. Otherwise go to Part Ill on the back (3.600) Part II Long-Term Capital Gains and Losses-Generally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines below. (g) Adjustments to (d) Proceeds (sales le) Cost (or other gain or loss from (h) Gain or loss) Subtract column (e) from e basis) price) This form may be easier to complete if you round off cents to whole dollars. Form(s) 8040. Part Column (d) and combine the result with column) line 2 column] 8a Totals for all long-term transactions reported on Form 1000-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8948, leave this line blank and go to line 3 8b Totals for all transactions reported on Form(s) 8040 with Box D checked 297,070 209.440 87,630 Totals for all transactions reported on Form(s) 894 with Box Echecked 10 Totals for all transactions reported on Form(s) 8040 with Box Fchecked 11 Gain from Form 4707, Part I: long-term gain from Forms 2439 and 6252, and long-term gain or loss) from Forms 4684.6781, and 3824 11 12 Net long-term gain or loss) from partnerships, Scorporations, estates, and trusts from Schedule(s) K-1 12 13 Capital gain distributions. See the instructions 131 900 14 Long-term capital loss carryover. Enter the amount if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions (Enter as negative) 14 (5.500) 15 Net long-term capital gain or (less). Combine lines 8a through 14 in column (h). Then go to Part Ill on the back 15 83,030 For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 11338H Schedule D (Form 1040 or 1040-SR) 2020 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL, 2021 McGraw-Hill Education