Check my work 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.] Part 2012 Part 2 of 2 During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: 2.5 points Investment Assets Date Acquired Purchase Price 300 shares of IBM common 11/22/2018 $ 10,580 200 shares of IBM common 4/3/2019 43,480 3,000 shares of Apple preferred 12/12/2019 170,000 2,100 shares of Cisco common 8/14/2020 54,800 420 shares of Vanguard mutual fund 3/2/2021 17,000 *No commissions are charged when no-load mutual funds are bought and sold. Broker's Commission Paid at Time of Purchase $ 100 300 1,300 550 No-load fund eBook 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: Print of References Investment Assets Date Sold Sale Price 300 shares of IBM common 5/6 $ 16,000 3,000 shares of Apple preferred 10/5 223,700 2,100 shares of Cisco common 8/15 63,480 451 shares of Vanguard mutual fund 12/21 18,000 *No commissions are charged when no-load mutual funds are bought and sold. Broker's Commission Paid at Time of Sale $ 100 2,000 650 No-load fund 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 $15,900 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 $8,300 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 $4,600 short-term capital loss carryover and a $7,100 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 $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in qualified dividends. Assume the Howells have $187,500 of wage income during the year. References 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. Part 1 of 2 File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Schedule D. Attachment Sequence No. 12A Name(s) shown on return Social security number or taxpayer identification number Mr. and Mrs. Howell 412-34-5670 Before you check Box A, B, or C below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-8. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. 2.5 points 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) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D. line 1a; you aren't required to report these transactions on Form 8949 (see 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 8949, page 1, for each applicable box. If you have more short-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. (A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) O(B) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS O(C) Short-term transactions not reported to you on Form 1099-B 1 (e) Cost or other Adjustment, if any, to gain or loss. If you enter (h) Gain or loss). . basis. See the Note an amount in column (g), enter a code in Subtract column (e) from column (d) below and see (a) Description of property (c) Date sold or column (f). See the separate instructions. (b) Date acquired (d) Proceeds (sales and combine the (Example: 100 sh. XYZ Co.) Column (e) in the disposed of (Mo., day, (Mo., day, yr.) price) (see yr.) instructions) separate instructions result with column (f) Code(s) from (9) Amount of instructions adjustment (9) 451 sh Vanguard mutual fund various 12/21/2021 18,000 15,900 X 1,000 X Nonbusiness bad debt various 12/31/2021 8,300 1 X 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (if Box C above is checked) 1 1 Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (el the basis as reported to the IRS, and enter an adiustment in column (a) to correct the basis. See Part 1 of 2 2.5 points 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) 1099-B 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 8949 (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) O(E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS O(F) Long-term transactions not reported to you on Form 1099-B eBook 1 Print Adjustment, if any, to gain or loss. If you enter an amount in column (g), enter a code in column (f). See the separate instructions. References (a) Description of property (Example: 100 sh.XYZ Co.) (b) Date acquired (mm/dd/yyyy) (c) Date sold or disposed of (mm/dd/yyyy) (d) Proceeds (sales price) (see instructions) (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions (h) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (g). (f) Code(s) from instructions (9) Amount of adjustments 15,900 10.680 5,220 300 sh IBM common 3,000 sh Apple preferred 2,100 sh Cisco common 11/22/2018 12/12/2019 05/06/2021 10/05/2021 08/15/2021 221,700 171,300 50,400 08/14/2020 62.830 55,350 7,480 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) 300,430 237,330 63,100 Part 1 of 2 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 (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) 8949, Part I. column (d) and combine the result with column (g) line 2 column (9) 1a Totals for all short-term transactions reported on Form 1099-B for which 2.5 points 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 8949, leave this line blank and go to line 16 1b Totals for all transactions reported on Form(s) 8949 with Box A checked 0 eBook 2 Totals for all transactions reported on Form(s) 8949 with Box B checked Print 4 5 References 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 4684, 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 6 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part II below. Otherwise, go to Part III on the back 7 0 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. (9) Adjustments to (d) Proceeds (sales (e) Cost (or other gain or loss from (h) Gain or loss) Subtract column (e) from This form may be easier to complete if you round off cents to whole dollars. price) basis) Form(s) 8949, Part column (d) and combine the result with column (9) II line 2 column (9) 8a Totals for all long-term transactions reported on Form 1099-B 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 8949, leave this line blank and go to line 8b 86 Totals for all transactions reported on Form(s) 8949 with Box checked 0 9 Totals for all transactions reported on Form(s) 8949 with Box E checked 10 Totals for all transactions reported on Form(s) 8949 with Box F checked 11 11 Gain from Form 4797, Part 1; long-term gain from Forms 2439 and 6252, and long-term gain or (loss) from Forms 4684, 6781, and 8824 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K-1 13 Capital gain distributions. See the instructions 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions 12 13 (Enter as negative) 14 15 Net long-term capital gain or loss). Combine lines 8a through 14 in column (h). Then go to Part III on the back 15 0 Comprehensive Problem 07-63 Part c (Algo) c. Assume the Howells' short-term capital loss carryover from prior years is $84,600 rather than $4,600 as indicated above. If this is the case, how much short-term and long-term capital loss carryover remains to be carried beyond 2021 to future tax years? $ 6,300 Short-term capital loss Long-term capital loss 0