Comprehensive Problem $5-1$

James Dangell $($birthdate August $2,1977)$ is a single taxpayer. Jim's earnings and withholdings as the manager of a local casino for $2021$ are reported on his Form W$-2($see separate tab$).$

Jim received Form $1098$ from the Reno Bank & Trust $($see separate tab$).$

Jim's other income includes interest on a savings account at Nevada National Bank of $$12,000(1099-$INT not shown$).$

Jim pays his ex$-$spouse, Sarah McLoughlin, $$3,900$ per month in accordance with their February $12,2020$ divorce decree. When their $12-$year$-$old child $($in the ex$-$wife's custody$)$ reaches the age of $18,$ the payments are reduced to $$2,800$ per month. His ex$-$wife's Social Security number is $554-44-5555.$

In $2021,$ Jim purchased a new car and so he kept track of his sales tax receipts during the year. His actual sales tax paid is $$5,210,$ which exceeds the estimated amount per the IRS tables.

Jim participates in a high$-$deductible health plan and is eligible to contribute to a health savings account. His HSA earned $$75$ in $2021.$

During the year, Jim paid the following amounts $($all of which can be substantiated$)$:

Credit card interest $$1,760$

Auto loan interest $4,300$

Auto insurance $900$

Property taxes on personal residence $3,400$

Contributions to HSA $2,000$

Income tax preparation fee $900$

Charitable contributions $($all cash$)$:

Boy Scouts of America $1,200$

St$.$ Matthews Church $3,100$

Nevada Democratic Party $250$

Fund$-$raising dinner for the Reno Auto Museum $100$

$($value of dinner is $$45)$

In $2021,$ Jim inherited over $$500,000$ from his Uncle Travis who died in $2021.$ Although Jim invested a large portion, he also contributed $$121,000$ cash to the newly named Travis School of Criminal Justice at the University of Reno.

Required:

Complete Jim's Form $1040$ and Schedules $1,$ A and B as well Form $8889.$

Make realistic assumptions about any missing data.

Jim had health coverage for the entire year and he does not want to contribute to the presidential election campaign.

Enter all amounts as positive numbers.

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

If required round any dollar amount to the nearest dollar.

Jim's W$-2$ Form

Question Content Area

Jim's earnings and withholdings as the manager of a local casino for $2021$ are reported on his Form W$-2$:

a Employee's social security number

$555-94-9358$ 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$)$

$31-14596561$ Wages, tips, other compensation

$182,000\mathrm{.}002$ Federal income tax withheld

$21,450\mathrm{.}00$

c Employer's name, address, and ZIP code

Lucky Ace Casino

$700$ N$.$ Sierra Street

Reno, NV $895033$ Social security wages

$142,800\mathrm{.}004$ Social security tax withheld

$8,853\mathrm{.}60$

$5$ Medicare wages and tips

$190,000\mathrm{.}006$ Medicare tax withheld

$2,755\mathrm{.}00$

$7$ Social security tips

$8$ Allocated tips

d Control number

$910$ Dependent care benefits

e Employee's first name and initial

James Dangell

$911$ Parr Blvd$.$

Reno, NV $89512$ Last name

Suff. $11$ Nonqualified plans $12$a See instructions for box $12$

C

o

d

e D

$8,000\mathrm{.}00$

$13$

Statutory employee Retirement plan Third$-$party sick pay

$$

$12$b

C

o

d

e W

$1,200\mathrm{.}00$

$14$ Other

$12$c

C

o

d

e

$12$d

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 $2021$

Department of the Treasury$$Internal Revenue Service

Copy B$$To Be Filed With Employee's FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

Jim's Form $1098$

Question Content Area

Jim received Form $1098$ from the Reno Bank & Trust.

$$ CORRECTED $($if checked$)$

RECIPIENT'S$/$LENDER$\text{'}$S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no$.$

Reno Savings and Loan

$49$ Commerce Street

Reno, NV $89501$

$*$Caution: The amount shown may not be fully deductible by you. Limits based on the loan amount and the cost and value of the secured property may apply. Also, you may only deduct interest to the extent it was incurred by you, actually paid by you, and not reimbursed by another person. OMB No$.1545-1380$

$2021$

Form $1098$ Mortgage

Interest

Statement

$1$ Mortgage interest received from payer$($s$)/$borrower$($s$)$

$ $18,903\mathrm{.}31$ Copy B

For Payer$/$

Borrower

The information in boxes $1$ through $9$ and $11$ 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 the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points, reported in boxes $1$ and $6$; or because you didn't report the refund of interest $($box $4)$; or because you claimed a nondeductible item.

RECIPIENT'S$/$LENDER$\text{'}$S TIN

$33-1234569$

PAYER'S$/$BORROWER$\text{'}$S TIN

$555-94-9358$

$2$ Outstanding mortgage principal

$ $592,400\mathrm{.}953$ Mortgage origination date

$03/03/2005$