Consider the following letter and answer Shady's question. To my friendly student tax preparer: Hello, my name is Shady Slim. 1 understand you are going to help me figure out my gross income for the year... whatever that means. It's been a busy year and I'm a busy man, so let me give you the lowdown on my life and you can do your thing. I was unemployed at the beginning of the year and got $2,000 in unemployment compensation. I later got a job as a manager for Roca Cola, l earned $60,000 in base salary this year. My boss gave me a $7,000 Christmas bonus check on December 22 . 1 decided to hold on to that check and not cash it until next year, so I worit have to pay taxes on it this year Pretty smart, huh? My job's pretty cool. I get a lot of fringe benefits like a membership to the gym that costs $500 a year and all the Roca Cola I can drink, although 1 can't really drink a whole lot-l figure $40 worth this year As part of my manager duties, I get to decide on certain things like contracts for the company. My good buddy, Eddie. runs a bottling company. I made sure that he won the botting contract for Roca Cola for this year (even though his contract wasn't quite the best). Eddie bought me a Corvette this year for being such a good friend. The Corvette cost $70.000, and Im sure he bought it for me out of the goodness of his heart. What a great guy! Here's a bit of good luck for the year. Upon leaving my office one day. I found $9.000 lying in the street' Well. one person's bad luck is my good luck, right? I like to gamble a lot. I won a $30,000 poker tournament in Las Vegas this year. I also won about $5,400 over the year playing the guys at our Friday night poker game. Can you believe that I didn't lose anything this year? Speaking of the guys, one of them hit me with his car as we were leaving the game one night. He must have been pretty ticked that he lostI I broke my right leg and my left arm. I sued the guy and got $15,000 for my medical expenses and $4,000 to pay my psychotherapist for the emotional problems I had relating to the injuries (I got really depressed), and I won $14,000 in punitive damages. That'll teach him that he's not so tough without his car! Another bit of bad luck. My uncle Monty died this year. I really liked the gyy, but the $300,000 inheritance I received from him made me feel a little better about the loss. I did the smart thing with the money and invested it in stocks and bonds and socked a little into my savings account. As a result, 1 received $700 in dividends from the stock, $300 in interest from the municipal bonds, and $400 in interest from my savings account. My ex-wife, Alice, is still paying me alimony. She's a lawyer who divorced me in 2015 because I was "unethical" or something like that. Because she was making so much money and I was unemployed at the time, the judge ruled that she had to pay ME alimony. Isn't that something? She sent me \$5.000 in alimony payments this year. She still kind of likes me, though. She sent me a check for $600 as a Christmas gift this year. I didn't get her anything, though. So there you go. That's this year in a nutshell. Can you figure out my gross income and complete page 1 of Form 1040 (through line 7b) and Schedule 1 for me? And because you're a student, this is free, right? Thanks, I owe you onel Let me know if I can get you a six-pack of Roca Cola or something a. Calculate the gross income. b-1. Complete page 1 of Form 1040 (through line 8b ). Downlood the Tox Form and enter the required values in the appropriate fields. Pleose right click on the ottoched Adobe document and select open in new window. Then, download the Tax Form and enter the required volues in the oppropriate fields. Save your completed Tox Form to your computer and then upload it here by clicking "Brows. Next, click "Sove." (Use 2020 tax rules regardiess of year on the form.) b Add Schedile 2, ine3, and Ine 12a and enter the total 13e Chlid tax credit or credis for other dependents. 12a b Add Schedile 3, Ine 7, and line 13 and enter the total 14 Subtract ine 13 trom line 12b. If zoro or lesk, enter -0 - 15 Oeter taxes, including ood-omployment tax, from Schedile 2, the 10 16 Add lines 14 and 15 . This is your total tax. 17. Federa income tax withheld from Forms W-2 and 1099 18 Other payments and refundable credits: 8. Earned income credit (EIC) b. Addinional child tax credt. Atach Schedule 8812 c. American opporturity aredt from Form 8863, ine 8 d Schedule 3, line 14 13a e. Add ines 18s through 1 bd. These are your total other poyments and refundable credits \begin{tabular}{ll|l|} You Owe 24 Extmated tax penaty /sep instructiona. & 24 \\ \hline Third Party \end{tabular} Third Party Do you want to aliow another person fother than your paid prepsed to dsouns this retum with the IAS? See insiructions. Designee Designes 1 Pione natme no Personal identifeation Sign fult befe ( Piete Here Your agnation suratme \begin{tabular}{|l|} \hline Date \\ \hline Date \\ \hline \\ \hline Eralabien \\ \hline \end{tabular} if the 17 g.gend yeu un lomity protoction PIN. entar it kare (seb inat.) Pleose right click on the attached Adobe document ond select open in new window. Then, download the Tax Form and enter the required values in the oppropriote fields. Save your completed Tox Form to your computer and then uplood it here by clicking "Browse." Next, click "Save." (Use 2020 tax rules regardless of year on the form.) Name(a) shown on form 1040 or 10408P At any time during 2019, did you recelve, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 2a Alimony received b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C 4 Other gains or (losses). Attach Form 4797 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E. 6 Farm income or (loss). Attach Schedule F 7 Unemployment compensation 8 Other income. List type and amount 9 Combine lines 1 through 8 . Enter here and on Form 1040 or 1040 -SB, line 7 a Yes No Part II Adjustments to Income 10 Educator expenses 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 12 Health savings account deduction. Attach Form 8889 13 Moving expenses for members of the Armed Forces. Attach Form 3903 14 Deductible part of self-employment tax. Attach Schedule SE 15 Self-employed SEP, SIMPLE, and qualified plans. 16 Self-employed health insurance deduction 17 Penalty on early withdrawal of savings 18 A Aimony paid b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 19 IRA deduction 20 Student loan interest deduction 21 Tuition and foes. Attach Form 8917 22. Add lines 10 through 21. These are your adjustments to income, Enter hore and on Form 1040 or 1040 -SF, line 8n \begin{tabular}{|c|c} \hline 1 & \\ \hline 2a & \\ \hline & \\ \hline 3 & \\ \hline 4 & \\ \hline 5 & \\ \hline 6 & \\ \hline 7 & \\ \hline & \\ \hline 8 & \\ \hline 9 & \\ \hline \end{tabular}