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 homemaker and Walter 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 2018, the Blacks provide over half of Alton's support.

The Blacks moved from Maine to Nevada. As a result, they sold their house in Maine on January 4, 2018. They originally paid $76,000 for the home on July 3, 1993, but managed to sell it for $604,000. They spent $13,000 on improvements over the years. They are currently renting in Las Vegas while they look for a new home.

The school district reimbursed Walter $550 for moving expenses. These are reflected on his W-2 (see separate tab). Walters previous job, as a high school teacher in Maine, was only 5 miles from his home. Skylar was unemployed prior to the move.

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 184 days during 2018 and used by the Blacks for 16 days. Pertinent information about the condo rental is as follows:

Rental income	$12,000
Mortgage interest reported on Form 1098	8,600
Homeowners' association dues	5,200
Utilities	1,200
Maintenance	3,800
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.

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.

a Employee's social security number 700-01-0002 website at Safe, accurate, - e fileVisit the 1RS usen, file OMB No. 1545-0008 FASTI Use b Employer identification number (EIN) 31-1238967 1 Wages, tips, other 2 Federal income tax withheld 50,900.00 4,320.00 c Employer's name, address, and ZIP code 3 Social security wages 50,900.00 4 Social security tax withheld Las Vegas School District 2234 Vegas Valley Drive Las Vegas, NV 89169 3,155.80 5 Medicare wages and tips 6 Medicare tax withheld 50,900.00 738.05 7 Social security tips 8 Allocated tips d Control number Verification code 10 Dependent care benefits e Employee's first name and initial Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 Walter Black 883 Scrub Brush Street, Apt # 52B Las Vegas, NV 89125 7,800.00 13 Statutory Retirement Third-party 12b employee plan sick pay 14 Other 12c 12d PAYER'S name, street address, city or town, state or province, 1a Total ordinary country, ZIP or foreign postal code, and telephone no. Dividends and Distributions 2018 S 1,400.00 Cyber Funds Equities Fund 41 Wall Street New York, NY 10005 1b Qualified dividends $ 998.00 Form 1099-DIV 2a Total capital gain 2b Unrecap. Sec. 1250 distr. s 6,543.12 PAYER'S TIN 2c Section 1202 gain | 2d Collectibles (28%) 17-1234326 222-43-7690 3 Nondividend 4 Federal income tax Copy B Skylar B. Black For Recipient 5 Section 199A This is important tax information and is being furnished to the IRS. I you are required to file a return, a negligence Street address (including apt. no.) 7 Foreign tax paid 8 Foreign country or U.S 883 Scrub Brush Street #52B City or town, state or province, country, and ZIP or foreign postal Form 1040 (2018) Walter and Skylar Black 700-01-0002 Page 2 50,900 1 2a 3a 4a Wages, salaries, tips, etc. Attach Form(s) W-2 Tax-exempt interest Qualified dividends IRAs, pensions, and b Taxable interest 2b 998 b Ordinary dividends 3b 1,400 Attach Form(s) W- 2. Also attach Form(s) W-2G and 1099-R if tax was 5a Social security benefits Sa b Taxable amount 4b b Taxable amount 5b 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6 8 Standard deduction or itemized deductions (rom Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- 11 a Tax (see inst) Deduction for- Single or married filing separately, $12,000 10 (check if any from: 1 Form(s) 8314 2 Form 4972 Married filing y or Qualifying b Add any amount from Schedule 2 and check here widow(er) $24,000 . Head of 12 a Child tax credit/credit for other dependents 13 14 15 16 17 b Add any amount from Schedule 3 and check here Subtract line 12 from line 11. I zero or less, enter -0- Other taxes. Attach Schedule 4 Total tax. Add lines 13 and 14 Federal income tax withheld from Forms W-2 and 1099 12 13 14 15 16 $18,000 If you checked any box under deduction, see Refundable credits: a EIC (see inst.) Form 8863 Add any amount from Schedule 5 Add lines 16 and 17. These are your total payments b Sch 8812 17 18 18 Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you 19 20a Amount of line 19 you want refunded to you. If Form 8883 is attached, check here 20a Direct deposit?Routing number See instructions. d Acount number 21 c Type: Checking Savings Amount of line 19 you want applied to your 2019 estimated tax 21 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see Amount You Owe 23 Estimated tax penalty (see Go to www.irs.gov/Form1040 for instructions and the latest information. 23 Form 1040 (2018) SCHEDULE 1 OM B No. 1545-0074 Additional Income and Adjustments to Income (Form 1040) Department of the Treasury Internal Revenue Service 2018 Attach to Form 1040. Go to www.irs.gov/Form1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040 Walter and Skylar Black Your social security number 700-01-0002 Additional 1-9b Reserved Income 1-9b 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimorry received 12 Business income or (loss). Attach Schedule C or C-EZ 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 10 12 13 521,543 X 14 15a 16a 17 Other gains or (losses). Attach Form 4797 Reserved Reserved Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 12,000 X 18 Farm income or (loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 22 Combine the amounts n the far right column. If you don't have any adjustments 17 18 19 20b 21 to income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 22 Adiustments 23 Educator expenses 23 a Employee's social security number 700-01-0002 website at Safe, accurate, - e fileVisit the 1RS usen, file OMB No. 1545-0008 FASTI Use b Employer identification number (EIN) 31-1238967 1 Wages, tips, other 2 Federal income tax withheld 50,900.00 4,320.00 c Employer's name, address, and ZIP code 3 Social security wages 50,900.00 4 Social security tax withheld Las Vegas School District 2234 Vegas Valley Drive Las Vegas, NV 89169 3,155.80 5 Medicare wages and tips 6 Medicare tax withheld 50,900.00 738.05 7 Social security tips 8 Allocated tips d Control number Verification code 10 Dependent care benefits e Employee's first name and initial Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 Walter Black 883 Scrub Brush Street, Apt # 52B Las Vegas, NV 89125 7,800.00 13 Statutory Retirement Third-party 12b employee plan sick pay 14 Other 12c 12d PAYER'S name, street address, city or town, state or province, 1a Total ordinary country, ZIP or foreign postal code, and telephone no. Dividends and Distributions 2018 S 1,400.00 Cyber Funds Equities Fund 41 Wall Street New York, NY 10005 1b Qualified dividends $ 998.00 Form 1099-DIV 2a Total capital gain 2b Unrecap. Sec. 1250 distr. s 6,543.12 PAYER'S TIN 2c Section 1202 gain | 2d Collectibles (28%) 17-1234326 222-43-7690 3 Nondividend 4 Federal income tax Copy B Skylar B. Black For Recipient 5 Section 199A This is important tax information and is being furnished to the IRS. I you are required to file a return, a negligence Street address (including apt. no.) 7 Foreign tax paid 8 Foreign country or U.S 883 Scrub Brush Street #52B City or town, state or province, country, and ZIP or foreign postal Form 1040 (2018) Walter and Skylar Black 700-01-0002 Page 2 50,900 1 2a 3a 4a Wages, salaries, tips, etc. Attach Form(s) W-2 Tax-exempt interest Qualified dividends IRAs, pensions, and b Taxable interest 2b 998 b Ordinary dividends 3b 1,400 Attach Form(s) W- 2. Also attach Form(s) W-2G and 1099-R if tax was 5a Social security benefits Sa b Taxable amount 4b b Taxable amount 5b 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6 8 Standard deduction or itemized deductions (rom Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0- 11 a Tax (see inst) Deduction for- Single or married filing separately, $12,000 10 (check if any from: 1 Form(s) 8314 2 Form 4972 Married filing y or Qualifying b Add any amount from Schedule 2 and check here widow(er) $24,000 . Head of 12 a Child tax credit/credit for other dependents 13 14 15 16 17 b Add any amount from Schedule 3 and check here Subtract line 12 from line 11. I zero or less, enter -0- Other taxes. Attach Schedule 4 Total tax. Add lines 13 and 14 Federal income tax withheld from Forms W-2 and 1099 12 13 14 15 16 $18,000 If you checked any box under deduction, see Refundable credits: a EIC (see inst.) Form 8863 Add any amount from Schedule 5 Add lines 16 and 17. These are your total payments b Sch 8812 17 18 18 Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you 19 20a Amount of line 19 you want refunded to you. If Form 8883 is attached, check here 20a Direct deposit?Routing number See instructions. d Acount number 21 c Type: Checking Savings Amount of line 19 you want applied to your 2019 estimated tax 21 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see Amount You Owe 23 Estimated tax penalty (see Go to www.irs.gov/Form1040 for instructions and the latest information. 23 Form 1040 (2018) SCHEDULE 1 OM B No. 1545-0074 Additional Income and Adjustments to Income (Form 1040) Department of the Treasury Internal Revenue Service 2018 Attach to Form 1040. Go to www.irs.gov/Form1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040 Walter and Skylar Black Your social security number 700-01-0002 Additional 1-9b Reserved Income 1-9b 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimorry received 12 Business income or (loss). Attach Schedule C or C-EZ 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here 10 12 13 521,543 X 14 15a 16a 17 Other gains or (losses). Attach Form 4797 Reserved Reserved Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 12,000 X 18 Farm income or (loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 22 Combine the amounts n the far right column. If you don't have any adjustments 17 18 19 20b 21 to income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 22 Adiustments 23 Educator expenses 23