During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets 300 shares of IBM common 200 shares of IBM common 3,000 shares of Apple preferred 2,100 shares of Cisco common 420 shares of Vanguard mutual fund Date Acquired 11/22/2018 4/3/2019 12/12/2019 8/14/2020 3/2/2021 Purchase Price $ 10,580 *No commissions are charged when no-load mutual funds are bought and sold. 43,480 170,000 54,800 17,000 Broker's Commission Paid at Time of Purchase $ 100 300 1,300 550 No-load fund* Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021: Broker's Commission Paid at Investment Assets Date Sold Sale Price Time of Sale 300 shares of IBM common 5/6 3,000 shares of Apple preferred 10/5 $ 16,000 223,700 2,100 shares of Cisco common 8/15 63,480 $ 100 2,000 650 451 shares of Vanguard mutual fund 12/21 18,000 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 $15,900 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 2021: 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 6/30/2021. In 2014, Mrs. Howell loaned $8,300 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $4,600 short-term capital loss carryover and a $7,100 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 $4,150 in municipal bond interest, $4,150 in interest from corporate bonds, and $6,300 in qualified dividends. Assume the Howells have $187,500 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 $26,000. Assume that asset bases are reported to the IRS. (Use the tax rate schedules, Dividends and Capital Gains Tax Rates.) one box. for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. 1 (A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (B) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B (a) Description of property (Example: 100 sh. XYZ Co.) (b) Date acquired (Mo., day, yr.) day, yr.) (c) Date sold or disposed of (Mo., (d) Proceeds (sales price) (see instructions) 18,000 0 451 sh Vanguard mutual fund various 12/21/2021 Nonbusiness bad various 12/31/2021 debt (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions 0 0 Adjustment, if any, to gain or loss. If you enter an amount in column (g), enter a code in column (f). See the separate instructions. (f) Code(s) from instructions (g) Amount of adjustment (h) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (g) 0 0 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked). < Prev 1 2 of 2 Next >