Create a $1040$ and Schedule $1$ for the following:

$1)$ Show an explanation $($including the calculation$)$ of the Net Capital Gain$/$Loss

a$.$ It is required that you break down each transaction using the formula Sales

Proceeds $$ Cost Basis $=$ Gain$/$Loss

b$.$ I$$d also recommend some explanation. That is$,$ a few brief comments about items

that are relevant.

c$.$ It is required that you mention each of the $5$additional$$ items from page $1.$

$2)$ An explanation of how you came up with the amount for form $1040$ line $12$

$3)$ Show an explanation for the calculation of tax $($form $1040$ line $16)$

a$.$ It is required that you break this down into a formula.

Hints:

$1)$ Gambling winnings are reported on Schedule $1,$ line $8$b$.$

$2)$ The income from Wanda$$s business will be reported on Schedule $1$ line $5.$

$3)$ Net Capital gains$/$losses are reported on form $1040$ line $7.$ No Sch D is required.

$4)$ The taxpayer has a refund. There should be something on line $34$ Form $1040.$

$5)$ Assume the taxpayers have adequate health insurance $($i$.$e$.$ ignore any health insurance

items on the returns$).$

$6)$ You must decide whether the taxpayer should take the standard deduction or itemize. Be

familiar with what deductions are $$For AGI$$ and $$From AGI$($e$.$g$.,$ student loan interest

is an above the line deduction$).$

$7)$ Do not forget the Qualified Business Income Deduction, line $13$ form $1040.$ Assume

Wanda qualifies for this deduction. In Chapter $15,$ we can discuss the rules in more detail. Assume that the QBID is a deduction equal to $20\%$ of Qualified Business Income $($QBI$).$ With QBI being equal to Schedule $1$ line $5.$

$8)$ S corps are not subject to Self$-$Employment Tax.

$9)$ Don$$t forget to check the box for filing status $($Single$,$ MFJ$,$ HOH, or MFS$).$

$10)$ We are not preparing state income or inheritance tax returns.