Question
Carlos (35) is single. He changed jobs during the year, and when he left his first job, he decided to take a distribution of funds
Carlos (35) is single. He changed jobs during the year, and when he left his first job, he decided to take a distribution of funds from his 401(k). He used the funds to make a down payment on a new car. The taxable amount of this distribution, reported in box 2a of Form 1099-R, was $15,000. There was a code 1 in box 7 of the Form 1099-R. Carlos's only other income during the year was $40,000 in wages.
Complete a Schedule 4 (Form 1040), Other Taxes, for Carlos. You may also need to complete Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. Then, enter the correct amounts on the first 7 lines on page 2 of Carlos's Form 1040. It is not necessary to complete the entire form. You will need to refer to the completed portion of Form 1040 to answer questions about this scenario in Part I of the Final Test.
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