Diana and Ryan Workman were married on January 1 of last year. Diana has an eight-year-old son, Jorge, from her previous marriage. Ryan works as a computer programmer at Datafile Incorporated (DI) earning a salary of $104,500. Diana is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Ryan earned a $104,500 salary for the year. b. Ryan borrowed $13,700 from Dl to purchase a car. Di charged him 2 percent interest ($274) on the loan, which Ryan paid on December 31. DI would have charged Ryan $890 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Diana received $2,850 in alimony and $6,200 in child support payments from her former husband. They divorced in 2016. d. Diana won a $1,070 cash prize at her church-sponsored Bingo game. e. The Workmans received $1,350 of interest from corporate bonds and $1,100 of interest from a municipal bond. Diana owned these bonds before she married Ryan. f. The couple bought 84 shares of ABC Incorporated stock for $57 per share on July 2. The stock was worth $81 a share on December 31. The stock paid a dividend of $1 per share on December 1. g. Diana's father passed away on April 14. She inherited cash of $67,000 from her father and his baseball card collection, valued at $3,700. As the beneficiary of her fathers life insurance policy, Diana also received $167,000. h. The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $2,900. i. Ryan received $3,800 cash for reaching 10 years of continuous service at DI. j. Ryan was hit and injured by a drunk driver while crossing a street at a crosswalk. He was unable to work for a month. He received $9,400 from his disability insurance. DI paid the premiums for Ryan, but it reported the amount of the premiums as compensation to Ryan on his year-end W-2. k. The drunk driver who hit Ryan in part (j) was required to pay his $3,700 medical costs, $3,200 for the emotional trauma he suffered from the accident, and $8,400 for punitive damages. 1. For meeting his performance goals this year, Ryan was informed on December 27 that he would receive a $6,700 year-end bonus. DI (located in Houston, Texas) mailed Ryan's bonus check from its payroll processing center (Tampa, Florida) on December 28. Ryan didn't receive the check at his home until January 2. m. Diana is a 10 percent owner of MNO Incorporated, a Subchapter 5 corporation. The company reported ordinary business income for the year of $126,000. Diana acquired the MNO stock two years ago. n. Diana's day care business collected $120,000 in revenues. In addition, customers owed her $11,500 at year-end. During the year, Diana spent $14,000 for supplies, $10,000 for utilities, $32,000 for rent, and $1,350 for miscellaneous expenses. One customer gave her use of his vacation home for a week (worth $11,000) in exchange for Diana allowing his child to attend the day care center free of charge. Diana accounts for her business activities using the cash method of accounting. o. Ryan's employer pays the couple's annual health insurance premiums of $14,000 for a qualified plan. 4. Complete page 1 of Form 1040 through line 9 and Schedule 1 for Ryan Workman (for filing MFS). (Input all the values as positive numbers. Enter any non-financial information, (e.g. Names, Addresses, social security numbers) EXACTLY as they appear in any given information or Problem Statement. Do not skip rows, while entering in Deductions section of Form 1040 PG1.) Ryan address is 19010 N.W. 135th Street. Social security numbers: Ryan: 111-22-3333 Diana: 222-33-4444 Jorge: 333-44-5555 1040 Department of the Treasury - Internal Revenue Service (99) U.S. Individual Income Tax Return 2020 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. Filing Status Single Married filing jointly Married filing separately (MFS) Married filing separately (MFS) Head of household (HOH) Qualifying widow(er) (QW) Check only If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying one box. person is a child but not your dependent Your first name and middle initial Last name Your social security number If joint return, spouse's first name and middle initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. a City, town, or post office. If you have a foreign address, also complete spaces below. State Apt. no. Presidential Election Campaign Check here if you, or your ZIP code spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change Foreign postal code your tax or refund. You Spouse Foreign country name Foreign province/state/county At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship (4) if qualities for (see instructions): (1) First name Last name number to you Child tax credit If more Credit for other dependents than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest 2a b Taxable interest 2b Sch. B if 3a Qualified dividends required. 3b b Ordinary dividends 4a IRA distributions. 4a b Taxable amount. 4b 5a Pensions and annuities 5 b Taxable amount. 5b Standard Social security benefits b Taxable amount 6b Deduction for 7 7 Capital gain or (loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9. ... . 8 separately, $12,400 9 9 Add lines 1, 2, 3, 4, 5, 6, 7, and 8. This is your total income 9 Married filing 10 Adjustments to income: Qualifying a From Schedule 1, line 22 10a widow(er), b 10b $24.800 Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household $18,650 11 Subtract line 10c from line 9. This is your adjusted gross income 11 If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13. 14 see instructions. 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O-. 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) jointly or AA Diana and Ryan Workman were married on January 1 of last year. Diana has an eight-year-old son, Jorge, from her previous marriage. Ryan works as a computer programmer at Datafile Incorporated (DI) earning a salary of $104,500. Diana is self-employed and runs a day care center. The Workmans reported the following financial information pertaining to their activities during the current year. a. Ryan earned a $104,500 salary for the year. b. Ryan borrowed $13,700 from Dl to purchase a car. Di charged him 2 percent interest ($274) on the loan, which Ryan paid on December 31. DI would have charged Ryan $890 if interest had been calculated at the applicable federal interest rate. Assume that tax avoidance was not a motive for the loan. c. Diana received $2,850 in alimony and $6,200 in child support payments from her former husband. They divorced in 2016. d. Diana won a $1,070 cash prize at her church-sponsored Bingo game. e. The Workmans received $1,350 of interest from corporate bonds and $1,100 of interest from a municipal bond. Diana owned these bonds before she married Ryan. f. The couple bought 84 shares of ABC Incorporated stock for $57 per share on July 2. The stock was worth $81 a share on December 31. The stock paid a dividend of $1 per share on December 1. g. Diana's father passed away on April 14. She inherited cash of $67,000 from her father and his baseball card collection, valued at $3,700. As the beneficiary of her fathers life insurance policy, Diana also received $167,000. h. The couple spent a weekend in Atlantic City in November and came home with gross gambling winnings of $2,900. i. Ryan received $3,800 cash for reaching 10 years of continuous service at DI. j. Ryan was hit and injured by a drunk driver while crossing a street at a crosswalk. He was unable to work for a month. He received $9,400 from his disability insurance. DI paid the premiums for Ryan, but it reported the amount of the premiums as compensation to Ryan on his year-end W-2. k. The drunk driver who hit Ryan in part (j) was required to pay his $3,700 medical costs, $3,200 for the emotional trauma he suffered from the accident, and $8,400 for punitive damages. 1. For meeting his performance goals this year, Ryan was informed on December 27 that he would receive a $6,700 year-end bonus. DI (located in Houston, Texas) mailed Ryan's bonus check from its payroll processing center (Tampa, Florida) on December 28. Ryan didn't receive the check at his home until January 2. m. Diana is a 10 percent owner of MNO Incorporated, a Subchapter 5 corporation. The company reported ordinary business income for the year of $126,000. Diana acquired the MNO stock two years ago. n. Diana's day care business collected $120,000 in revenues. In addition, customers owed her $11,500 at year-end. During the year, Diana spent $14,000 for supplies, $10,000 for utilities, $32,000 for rent, and $1,350 for miscellaneous expenses. One customer gave her use of his vacation home for a week (worth $11,000) in exchange for Diana allowing his child to attend the day care center free of charge. Diana accounts for her business activities using the cash method of accounting. o. Ryan's employer pays the couple's annual health insurance premiums of $14,000 for a qualified plan. 4. Complete page 1 of Form 1040 through line 9 and Schedule 1 for Ryan Workman (for filing MFS). (Input all the values as positive numbers. Enter any non-financial information, (e.g. Names, Addresses, social security numbers) EXACTLY as they appear in any given information or Problem Statement. Do not skip rows, while entering in Deductions section of Form 1040 PG1.) Ryan address is 19010 N.W. 135th Street. Social security numbers: Ryan: 111-22-3333 Diana: 222-33-4444 Jorge: 333-44-5555 1040 Department of the Treasury - Internal Revenue Service (99) U.S. Individual Income Tax Return 2020 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. Filing Status Single Married filing jointly Married filing separately (MFS) Married filing separately (MFS) Head of household (HOH) Qualifying widow(er) (QW) Check only If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying one box. person is a child but not your dependent Your first name and middle initial Last name Your social security number If joint return, spouse's first name and middle initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. a City, town, or post office. If you have a foreign address, also complete spaces below. State Apt. no. Presidential Election Campaign Check here if you, or your ZIP code spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change Foreign postal code your tax or refund. You Spouse Foreign country name Foreign province/state/county At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship (4) if qualities for (see instructions): (1) First name Last name number to you Child tax credit If more Credit for other dependents than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest 2a b Taxable interest 2b Sch. B if 3a Qualified dividends required. 3b b Ordinary dividends 4a IRA distributions. 4a b Taxable amount. 4b 5a Pensions and annuities 5 b Taxable amount. 5b Standard Social security benefits b Taxable amount 6b Deduction for 7 7 Capital gain or (loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9. ... . 8 separately, $12,400 9 9 Add lines 1, 2, 3, 4, 5, 6, 7, and 8. This is your total income 9 Married filing 10 Adjustments to income: Qualifying a From Schedule 1, line 22 10a widow(er), b 10b $24.800 Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household $18,650 11 Subtract line 10c from line 9. This is your adjusted gross income 11 If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13. 14 see instructions. 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O-. 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2020) jointly or AA