Charlie (calendar year taxpayer, U.S. citizen) lives with Sam at 100 Morrissey Blvd, Boston, MA 02125. Poor Charlie's wife passed away during 2016. Also, Charlie wishes to claim both Jamie Brown and Sam White as dependents.

S2. Jamie (single, U.S. citizen) earns $45,000 as a full-time waitress in Chicago. She provides 40% of her own support whereas Charlie provides 60% of her support. Sam (single, U.S. citizen) is an old buddy of Charlie and lives with Charlie during the entire year. Since Sam has no gross income, Charlie provides 100% of support and maintains the household for Sam.

S3. Charlie works for Ernst & Young as a tax consultant from March 1st to December 31st, and his salary (excluding the group-term life insurance premium) is $91,030. Ernst & Young pays group term life insurance premium for Charlie. The coverage amount is $1,150,000. The cost per $1,000 of protection for one-month period is $1.27.

S4. Charlie received interest of $600 on a saving account at KeyBanc and interest of $800 on City of Cambridge bond.

S5. Charlie received dividends of $5,000 from Verizon Wireless Co. where he purchased the stock 3 years ago. He also received dividends of $1,000 from Home Depot Inc. where he purchased it 2 days before the ex-dividend date and sold it 50 days later.

S6. Charlie was married lot of times. Charlie paid alimony of $13,200 to his another ex-wife, Peggy (SSN: 111-22-3333), and received alimony of $7,200 from his another ex-wife, Lucy.

S7. Charlie purchased an annuity from an insurance company for $120,000. He is to receive $900 per month for life starting January 2017. His life expectancy is assume to be 20 years from the annuity starting date.

(Continued)

Relationship to Charlie

Social Security Number

Charlie Brown (age 66)

123-45-6789

Julie Brown (age 56, deceased)

Late wife

Jamie Brown (age 21)

Daughter

123-45-6787

Sam White (age 60)

Friend

987-65-4321

1

S8. Charlie is a partner of a law firm ("Law and Order"), but he is not materially participating in the operation of the firm. His share of profit is 20% where the annual profit was $35,000.

S9. During the first two months of the year, Charlie was unemployed and received $3,000 of unemployed compensation from the state (yeah...yeah... it's an unrealistic case...).

S10. Charlie received $170,000 from winning Mega Millions!

S11. Charlie owed $13,000 but the generous creditor accepts $4,000 for full satisfaction.

S12. Charlie canceled his life insurance policy and cashed in the proceeds to purchase a new home. He had paid premiums of $40,000 and collected $30,000 from Progressive.

S13. Charlie got hit by a truck driver who had a blood alcohol level of .15. He received $40,000 of medical care, $8,000 of loss of income, and $20,000 of punitive damage.

S14. Charlie has $36,000 of social security benefit. According to the formula, the taxable social security benefit is equal to $30,600.

S15. Charlie has $30,000 of medical expenses.

S16. Federal income tax withheld from Form W-2 = $88,643.81. Assume there are no other tax credits to be claimed.