Fill out 2015 Form 1040 pages 1 & 2 through Line #43 (taxable income) for the Morris family using the information from the same Problem #52. You do not have to fill out anything belowline #43, as all lines below that exceed the requirements of the problem and/or have not yetbeen covered in this course. Also assume that lines #23-#36 are either zero or n/a, as we will not be covering those issues until a later Module (and there was nothing applicable to those lines in the fact scenario anyway).

Comprehensive Problem (Tax Return Problem). Mr. and Mrs. Sam Morris retired on February 10, 2013, and call you in for tax advice. Both Sam and his wife Sarah have worked for many years and are both 65 years of age. Facts: Dependent child: Age 21 Social Security Benefits $9,900 Salaries: Sam (January 1February 10) 7,000 Sarah (January 1February 10) 5,500 Interest Income: Port Authority of N.Y. Bonds 300 Interest from Bank Deposits 1,400 Corporate Bonds 900 Highway Bonds of Ohio 100 Dividend Income: Microsoft Common Stock 4,000 General Electric Common Stock 2,000 AGA Ltd. of England 1,000 Net Rental Income 4,000 One of their tenants moved out on July 14, 2013, and Sam determines that they had damaged the stove, and therefore returned only $50 of their $150 security deposit. The Morrises' daughter borrowed $10,000 two years ago to purchase a new automobile. She has made payments to her parents and on September 1, 2013, only $2,500 was still outstanding on the loan. On their daughter's birthday, they told her she no longer had to make payments. Sam was Vice President of a very large corporation. As part of his fringe benefit package, the corporation purchased for him $50,000 of group-term life insurance. The corporation continues to pay for his life insurance even after retirement. The Morrises' three children gave their parents a gala retirement party. Many friends and relatives were invited. Gifts valued at over $1,000 were received by the couple. In October, Mrs. Morris entered a contest being run by a local bank. She submitted drawings for a bank logo. Her drawing was selected and she received $500. Many years ago, Sam purchased an annuity policy for $9,000. Starting on March 3, 2013, he began receiving lifelong monthly payments of $60. The Morrises' 21-year-old daughter is in college. She worked during the summer and earned $2,500. Interest on her savings accounts amounted to $500. Her parents paid for the college tuition of $4,000. The Morrises have itemized deductions of $14,000. Determine the Morrises' taxable income for 2013. Form 1040 2014 (99) Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return OMB No. 1545-0074 , 2014, ending IRS Use OnlyDo not write or staple in this space. See separate instructions. For the year Jan. 1-Dec. 31, 2014, or other tax year beginning Your first name and initial Last name , 20 Your social security number If a joint return, spouse's first name and initial Last name Spouse's social security number Apt. no. Home address (number and street). If you have a P.O. box, see instructions. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Foreign country name Filing Status Check only one box. Exemptions Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse Foreign province/state/county 1 4 Single Married filing jointly (even if only one had income) 2 3 c Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. Married filing separately. Enter spouse's SSN above and full name here. 6a b 5 Qualifying widow(er) with dependent child Yourself. If someone can claim you as a dependent, do not check box 6a . Spouse . Dependents: (1) First name . . . . . . . . . . . (2) Dependent's social security number Last name . . . . . . . . . . . . . . . . } (4) if child under age 17 qualifying for child tax credit (see instructions) (3) Dependent's relationship to you Dependents on 6c not entered above d Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. If you did not get a W-2, see instructions. Adjusted Gross Income Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions) If more than four dependents, see instructions and check here Income Make sure the SSN(s) above and on line 6c are correct. Total number of exemptions claimed . . . . . . . . . . . . . . . . . . . . . . . 7 . 8b . . . . . . . . . 8a . . . . . . . 9a 10 11 Qualified dividends . . . . . . . . . . . 9b Taxable refunds, credits, or offsets of state and local income taxes Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 12 13 14 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 12 13 14 15a 16a 17 IRA distributions . 15a b Taxable amount . . . Pensions and annuities 16a b Taxable amount . . . Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 17 18 19 20a Farm income or (loss). Attach Schedule F . Unemployment compensation . . . . Social security benefits 20a 18 19 20b 21 22 Other income. List type and amount Combine the amounts in the far right column for lines 7 through 21. This is your total income 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 . 24 25 26 27 28 Moving expenses. Attach Form 3903 . . . . . . Deductible part of self-employment tax. Attach Schedule SE . Self-employed SEP, SIMPLE, and qualified plans . . 26 27 28 29 30 31a Self-employed health insurance deduction Penalty on early withdrawal of savings . . . . . . . . . . 32 33 34 Alimony paid b Recipient's SSN IRA deduction . . . . . . . Student loan interest deduction . . Tuition and fees. Attach Form 8917 . 29 30 31a . . . . . . . . . . . . 32 33 34 35 36 37 Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 . . . . . . . . . . . . . Subtract line 36 from line 22. This is your adjusted gross income 7 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . 8a b 9a Taxable interest. Attach Schedule B if required . Tax-exempt interest. Do not include on line 8a . Ordinary dividends. Attach Schedule B if required . . . . . . . b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b Taxable amount . . . . . . . . . . . . Add numbers on lines above 21 22 23 . . For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. . . . . . . . . . 36 37 Cat. No. 11320B Form 1040 (2014) Page 2 Form 1040 (2014) 38 Amount from line 37 (adjusted gross income) Tax and Credits 39a Check if: Standard Deduction for People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. All others: Single or Married filing separately, $6,200 Married filing jointly or Qualifying widow(er), $12,400 Head of household, $9,100 . . Other Taxes 58 59 60a Unreported social security and Medicare tax from Form: a b 61 First-time homebuyer credit repayment. Attach Form 5405 if required 62 63 Form 8960 c Taxes from: a Form 8959 b Add lines 56 through 62. This is your total tax . . Payments If you have a qualifying child, attach Schedule EIC. Sign Here Paid Preparer Use Only . You were born before January 2, 1950, Spouse was born before January 2, 1950, . . Blind. Blind. . } . . . . . 38 . Total boxes checked 39a 39b . . 42 43 Exemptions. If line 38 is $152,525 or less, multiply $3,950 by the number on line 6d. Otherwise, see instructions Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . Form 4972 c Tax (see instructions). Check if any from: a Form(s) 8814 b 44 45 46 47 48 49 50 51 52 53 54 55 56 57 64 65 66a b 67 68 69 70 71 72 75 76a Alternative minimum tax (see instructions). Attach Form 6251 . Excess advance premium tax credit repayment. Attach Form 8962 . . . . . . . . . . . . . . . 48 . . . . . . 52 Residential energy credits. Attach Form 5695 . . . . 53 3800 b 8801 c Other credits from Form: a 54 Add lines 48 through 54. These are your total credits . . . . . Subtract line 55 from line 47. If line 55 is more than line 47, enter -0- . . . . . . . . . . . . Self-employment tax. Attach Schedule SE . . . . Add lines 44, 45, and 46 . . . . . . . Foreign tax credit. Attach Form 1116 if required . . . . . . . . . . . . . . . . . Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . . . . . . . . . . Instructions; enter code(s) . . . . . . . . . . 64 Federal income tax withheld from Forms W-2 and 1099 . . 2014 estimated tax payments and amount applied from 2013 return 65 Earned income credit (EIC) . . . . . . . . . . 66a . . . . . b 4137 . . . . . . . . . . . . . 67 American opportunity credit from Form 8863, line 8 . Net premium tax credit. Attach Form 8962 . . . . Amount paid with request for extension to file . . . . . . . . . 68 69 70 . 71 72 Credits from Form: a 2439 b Reserved c Reserved d 73 Add lines 64, 65, 66a, and 67 through 73. These are your total payments . Excess social security and tier 1 RRTA tax withheld Credit for federal tax on fuels. Attach Form 4136 . . Full-year coverage Health care: individual responsibility (see instructions) Nontaxable combat pay election 66b Additional child tax credit. Attach Schedule 8812 . . . . . . . 8919 Household employment taxes from Schedule H . . . . . . . . . 40 41 42 43 44 45 46 47 49 50 51 Credit for child and dependent care expenses. Attach Form 2441 Education credits from Form 8863, line 19 . . . . . Retirement savings contributions credit. Attach Form 8880 Child tax credit. Attach Schedule 8812, if required . . . 55 56 57 58 59 60a 60b 61 62 . 63 . 74 . . . . . If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75 Amount of line 75 you want refunded to you. If Form 8888 is attached, check here 76a . b d c Type: Routing number Checking Savings Account number Amount of line 75 you want applied to your 2015 estimated tax 77 77 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions 78 79 Estimated tax penalty (see instructions) . . . . . . . 79 Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete below. No Personal identification number (PIN) Phone no. Designee's name Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.) PTIN Check if self-employed Joint return? See instructions. Keep a copy for your records. . Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . Third Party Designee . 40 41 Direct deposit? See instructions. Amount You Owe . If your spouse itemizes on a separate return or you were a dual-status alien, check here b 73 74 Refund { . Print/Type preparer's name Firm's name Preparer's signature Date Firm's EIN Firm's address Phone no. www.irs.gov/form1040 Form 1040 (2014)