Comprehensive Problem 4-1

Skylar and Walter Black have been married for 25 years. They live at 883 Scrub Brush Street, Apt. 52B, Las Vegas, NV 89125. Skylar is a stay-at-home parent and Walt is a high school teacher. His W-2 form is located on the next tab. Skylar's Social Security number is 222-43-7690 and Walt's is 700-01-0002. Neither are age 65 or older. The Blacks provide all the support for Skylar's mother, Rebecca Backin (Social Security number 411-66-2121), who lives in a nursing home in Reno, NV and has no income. Walter's father, Alton Black (Social Security number 343-22-8899), lives with the Blacks in Las Vegas. Although Alton received Social Security benefits of $7,600 in 2020, the Blacks provide over half of Alton's support. Skylar and Walt claim a $500 other dependent credit each for Rebecca and Alton.

Walts earnings from teaching are included on the W-2 (see separate tab).

The Blacks moved from Maine to Nevada. As a result, they sold their house in Maine on January 4, 2020. They originally paid $75,000 for the home on July 3, 1995, but managed to sell it for $604,000. They spent $14,000 on improvements over the years. They are currently renting in Las Vegas while they look for a new home.

The Blacks received a 1099-DIV from their mutual fund investments (see separate tab).

The Blacks own a ski condo located at 123 Buncombe Lane, Brian Head, UT 84719. The condo was rented for 185 days during 2020 and used by the Blacks for 15 days. The rental activity does not rise to the level to qualify for the QBI deduction. Pertinent information about the condo rental is as follows:

Rental income	$23,700
Mortgage interest reported on Form 1098	16,000
Homeowners' association dues	5,200
Utilities	3,400
Maintenance	6,600
Depreciation (assume fully depreciated)	0

The above amounts do not reflect any allocation between rental and personal use of the condo. The Blacks are active managers of the condo. The Blacks received a $2,400 EIP in 2020.

Required: Complete Form 1040 and the schedules and forms provided for the Blacks.

Assume the taxpayers had health coverage for the entire year.

Neither taxpayers wants to contribute to the presidential election campaign.

If an amount box does not require an entry or the answer is zero, enter "0".

Do not round any percentages.

If required, round your answers to the nearest dollar.

If required, enter a "loss" as a negative number on the tax form. Do not enter deductions as negative numbers.

Special instructions for Form 8582: If required, use the minus sign to enter a "loss" as a negative number on the lines 1d, 4 and 16. However, per the instructions on the tax return, enter all numbers in Part II as positive amounts.

Walter's earnings from teaching are:

a Employee's social security number 700-01-0002

OMB No. 1545-0008

Safe, accurate, FAST! Use

IRS e ~ file

Visit the IRS website at www.irs.gov/efile

b

Employer identification number (EIN) 31-1239867

1

Wages, tips, other compensation 54,300.00

2

Federal income tax withheld 4,100.00

c

Employer's name, address, and ZIP code Las Vegas School District 2234 Vegas Valley Drive Las Vegas, NV 89169

3

Social security wages 54,300.00

4

Social security tax withheld 3,366.60

5

Medicare wages and tips 54,300.00

6

Medicare tax withheld 787.35

7

Social security tips

8

Allocated tips

d

Control number

9

10

Dependent care benefits

e

Employee's first name and initial Last name Walter Black 883 Scrub Brush Street, Apt. 52B Las Vegas, NV 89125

Suff.

11

Nonqualified plans

12a

See instructions for box 12

C o d e

DD

$7,900.00

13

Statutory employee	Retirement plan	Third-party sick pay

12b

C o d e

14

Other

12c

C o d e

12d

C o d e

f

Employee's address and ZIP code

15 State NV		Employer's state ID number	16	State wages, tips, etc.	17	State income tax	18	Local wages, tips, etc.	19	Local income tax	20	Locality name

Form W-2

Wage and Tax Statement

2020

Department of the TreasuryInternal Revenue Service

Copy BTo Be Filed With Employee's FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

The Blacks received the following 1099-DIV from their mutual fund investments:

CORRECTED (if checked)
PAYER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. Cyber Equities Fund 41 Wall Street New York, NY 10005			1aTotal ordinary dividends $ 1,500.00		OMB No. 1545-0110 2020 Form 1099-DIV	Dividends and Distributions
			1bQualified dividends $ 1,050.00
			2aTotal capital gain distr. $ 6,700.23		2bUnrecap. Sec. 1250 gain $		Copy B For Recipient This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported.
PAYER'S TIN	RECIPIENT'S TIN		2cSection 1202 gain		2dCollectibles (28%) gain
17-1234326	222-43-7690		$		$
RECIPIENT'S name Skylar B. Black			3Nondividend distributions $		4Federal income tax withheld $
			5 Section 199A dividends		6 Investment expenses
Street address (including apt. no.)			$		$
883 Scrub Brush Street, #52B			7Foreign tax paid		8Foreign country or U.S. possession
City or town, state or province, country, and ZIP or foreign postal code			$
Las Vegas, NV 89125			9Cash liquidation distributions $		10Noncash liquidation distributions $
		FATCA filing requirement	11Exempt-interest dividends $		12Specified private activity bond interest dividends $
Account number (see instructions)			13 State	14 State identification no	15 State tax withheld $
					$

Form 1099-DIV

(keep for your records)

www.irs.gov/Form1099DIV

Department of the Treasury - Internal Revenue Service