Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During 2 0 2 3 , your clients, Mr . and Mrs . Howell, owned the following investment assets: Investment Assets Date Acquired Purchase Price

During 2023, your clients, Mr. and Mrs. Howell, owned the following investment assets:
Investment Assets Date Acquired Purchase Price Broker's Commission Paid at Time of Purchase
300 shares of IBM common (NYSE: IBM)11/22/2020 $ 10,540 $ 100
200 shares of IBM common (NYSE: IBM)4/3/202143,440300
3,000 shares of Apple preferred (NASDAQ: AAPL)12/12/2021166,0001,300
2,100 shares of Cisco common (NASDAQ: CSCO)8/14/202254,400550
420 shares of Vanguard mutual fund 3/2/202316,600 No-load fund*
*No commissions are charged when no-load mutual funds are bought and sold.
Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2023 and to reinvest in municipal bonds. The following investment assets were sold in 2023:
Investment Assets Date Sold Sale Price Broker's Commission Paid at Time of Sale
300 shares of IBM common 5/6 $ 15,600 $ 100
3,000 shares of Apple preferred 10/5223,3002,000
2,100 shares of Cisco common 8/1563,440650
451 shares of Vanguard mutual fund 12/2117,600 No-load fund*
*No commissions are charged when no-load mutual funds are bought and sold.
The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $15,500 on the Form 1099-B they received.
In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2023:
The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2023.
In 2017, Mrs. Howell loaned $7,900 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2023, and Mrs. Howell has been notified she will not be receiving any repayment of the loan.
The Howells have a $4,200 short-term capital loss carryover and a $6,700 long-term capital loss carryover from prior years.
The Howells did not instruct their broker to sell any particular lot of IBM stock.
The Howells earned $3,950 in municipal bond interest, $3,950 in interest from corporate bonds, and $5,900 in qualified dividends.
Assume the Howells have $177,500 of wage income during the year.
a. Use Form 8949 and page 1 of Schedule D to compute net long-term and short-term capital gains. Then, compute the Howells' tax liability for the year (ignoring the alternative minimum tax and any phase-out provisions) assuming they file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $30,000. Assume that asset bases are reported to the IRS. (Use the tax rate schedules, Dividends and Capital Gains Tax Rates.)
Mr. Howell social security number: 412-34-5670

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting For Undergraduates

Authors: Christensen, Theodore E. Hobson, L. Scott Wallace, James S.

1st Edition

1618531123, 9781618531124

More Books

Students also viewed these Accounting questions