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 $
					$

I need help filling out form 1040 and qualified dividends and capital gains tax worksheet

(2) Social security number (3) Relationship to you Foto 1040 Dependents (see instructions): more than four (1) First name Last name dependent, Rebecca Bacion Instructions and check here Alton Black (4) / If qualifies for (see Instructions): Child tax credit Credit for other dependents No Yes 411-66-2121 Mother 343-22-8899 Father No Yes 1 54,300 2b 3b 1,500 4b 5a 5b 6b 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach 2a Tax-exempt interest 2a b Taxable interest Sch. Bit 3a Qualified dividends required. 1,050 b Ordinary dividends 4a TRA distributions 4a b Taxable amount 5a Pensions and annuities d Taxable amount. Standard 6a Social security benefits 60 b Taxable amount Deduction for 7 Capital gain or loss). Attach Schedule Dif required. If not required, check here Single or Married in 8 Other income from Schedule 1, line 9 separately $12,400 9 Add lines 1, 2, 3, 4, 5, 6, 7 and 8. This is your total income Married fing Jolently or 10 Adjustments to income Qualitying a From Schedule 1. line 22 100 widower $2.000 b Charitable contributions if you take the standard deduction Head of See Instructions. 100 household Add lines 10 and 106. These are your total adjustments to income 315,650 ll you checked 11 Subtractine 10c from line 9. This is your adjusted gross income . 7 8 9 100 11 11 Subtract line 10c from line 9. This is your adjusted gross income 11 Foon 1040 310.650 . If you checked any box under Standard Deduction see instruction 12 Standard deduction or itemized deductions (from Schedule A) 12 13 Qualified business income deduction. Attach Form 8995 or Form 8995- 13 14 Add lines 12 and 13 14 15 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter -0. For Disclosure, Privacy Ad, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) Form 1040 (2020) 700-01-0002 Page 2 16 Walter and Skylar Black Tax (see instructions). Check if any from Form(s): 108814 2 4972 30 Amount from Schedule 2, line 16 17 17 18 Add lines 16 and 17... 18 19 Child tax credit or credit for other dependents 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 22 Subtract line 21 from line 18. If zero or less, enter 22 23 Other taxes, including self-employment tax, from Schedule 2, line 10 24 Add lines 22 and 23. This is your total tax 23 25 24 Federal income tax withheld from: Form(s) W-2 b Form(s) 1099 25a 25b Check My Work Fou 1040 25 Federal income tax withheld from: Form(s) W-2 250 25b b Form(s) 1099 c Other forms (See Instructions) 250 25d 26 d Add lines 25 through 250 . If you have a 26 2020 estimated tax payments and amount applied from 2019 return Qualifying child attach Sch. EIC 27 Eamed Income credit (EIC) If you have 27 montaxable Additional child tax credit. Altach Schedule 8812 combat av, see 28 28 instructions American opportunity credit from Form 1863, line 8...... 29 29 Recovery rebate credit. See instructions 30 30 Amount from schedule 3. line 13 31 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 Refund 33 Add lines 25, 26, and 32. These are your total payments 14 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid 35a Amount of line 34 you want refunded to you. If Form 38 is attached, check here 34 350 Ouck My Work Qualified Dividends and Capital Gain Tax Worksheet Complete the Walter and Skylar Black's Qualified Dividends and Capital Gain Tax Worksheet Qualified Dividends and Capital Gain Tax Worksheet-Line 16 Before you begin: See the earlier instructions for line 16 to see if you can use this worksheet to figure your tax. Before completing this worksheet, complete Form 1040 or 1040-SR through line 15. If you don't have to file Schedule D and you received capital gain distributions, be sure you checked the box on Form 1040 or 1040-SR, line 7 1. Enter the amount from Form 1040 or 1040-SR, line 15. However, if you are filing Form 2555 (relating to foreign earned income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet. 1. 2. Enter the amount from Form 1040 or 1040-SR, line 3a" 2. 3. Are you filing Schedule Yes Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or 16 is blank or a loss, entero- 3. NO Enter the amount from Form 1040 or 1040-SR line 7 4. Add lines 2 and 3 TIL 5. ting Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that fort. Otherwise, enter -- 5. 6. Subtract line 5 from line 4. 1 zero or less, entero 7. Subtract line from Ine 1. If zero or less entero 2 Chede My Work Qualified Dividends and Capdal Gain Tax Worksheet Enter 140,000 single or married filing separately, 180,000 f married filing jointly or qualifying widower), 153,600 head of household 3 8. 9. 9. Enter the smaller of line 1 or lines 10. 10. Enter the smaller of line 7 or line 9 11. 11. Subtract line 10 from line 9. This amount is taxed at 096 12 12. Enter the smaller of line 1 or line 6 13. 11. Enter the amount from line 11 14. 14. Subtract line 13 from line 12 15. Enter: $441,450 if single, $240,300 if married filing separately. 5496,600 W married filing jointly or qualifying widow(er), 5469,050 If head of household 15. 16. Enter the smaller of line 1 or line 15 16. 17. Add lines and 11 17. 18. Subtract line 17 from line 16. If zero or less, enter 0 18. 19. Enter the smaller of line 14 or line 15 19. 20. Multiply 19 tv 155 0.15) 20. 21. Add lines 11 and 19 21. CM