Individual tax accounting and planning
J L Individual Tax Accounting and Planning Tax Return #3 Fact Pattern Name: Please complete the federal income tax return for Maggie chmitz for the tax year 2020. Please complete Form 1040 in its entirety (down to the amount owed or the amount to be refundeo) and Schedule A. Please complete a handwritten Schedule D, with the remainder of the supporting calculations. You do not need to complete a formal Schedule D. Please show all calculations on a separate piece of paper and document the calculation of the tax liability in the space immediately below these instructions (in the space, where lndicatec. Please order the pages of your submission as follows: This page The Fact Pattern page Form 1040 page 1 Form 1040 page 2 Schedules 1, 2 and 3, where applicable Schedule A Pages with supporting calculations with reference to the related item being calculated. Calculations without reference will not receive partial credit. HEMP-SON.\" Show the calculation of your Tax Liability here (please use the method shown in class): Individual Tax Accounting and Planning Tax Return #3 Fact Pattern Name: Maggie Schmitz has undergone some major changes in her life recently. In 2017, at the age of 46, her husband, Roger, passed away. Maggie has not remarried as of the end of 2020. Maggie currently lives on a naval air base, as a naval officer. She was living on a different base when her husband passed away, but she was transferred to a naval base near her family during 2020. Magdalena has three children (ages as of the end of the year): Alyssa (24), Tyler (16), and Connor (11). Magdalena reported the following information: Maggie's social security number is 294-83-2845 Alyssa's social security number is 824-84-8456 Tyler's social security number is 824-34-9584 Connor's social security number is 824-56-2984 Alyssa is unmarried and a full-time graduate student at the University of Pittsburgh. She received her bachelor's degree the year her father passed away, 2017. Alyssa works part-time to help with some of her living expenses and started graduate school. Alyssa earned $2,300 in gross income during the year. Maggie provided support for Alyssa including paying for rent, books, tuition, food, clothes, medicine, and other support items. In total, Magdalena provided $12,700 of support for the year. The University provided Alyssa with a Form 1098-T at year end documenting the following: Tuition $6,500 Books $2,000 In order to permit Maggie to work, she sends Connor to a day care program after school five days a week. During the year, Magdalena paid the day care operator $2,750 for Connor's care. Magdalena incurred the following moving-related expenses during the year: Transport of household items $3,200 Meals in transit 150 House hunting trip 1,350 In addition, she drove her car the 400 miles to the new naval base. Maggie's W-2 for the year reported the following: Gross Wages Federal Income Tax State Income Tax Withholding Withholding $98,435 $9,275 $1,700Maggie also received the following during the year: Life Insurance Payment-Mutual Life (Mothefs passing) $150,000 Cash gift from her father $ 5,000 Interest income-First Bank of Bedford $ 310 Interest income-General Electric Bond $ 3,200 Interest income from U.S. Treasury Bond $ 350 Interest income-Bedford School District Municipal Bond $ 2,500 Interest income-Johnstown Rural Improvement District Bond $ 1,300 (municipal interest income) Qualified dividend income from Abbott Labs $275 Qualified dividend income from 3M $350 Dividend income (not qualified) from China Fund $2,000 State income tax refund" $ 725 *Refund was from state tax she paid last year. Maggie itemized her deductions in 2019 in the amount of $24,900. Maggie paid the following expenditures during the year: Dentist lunreimbugsed by insurance) $6,500 Doctors (unreimbuged by insurance) $4,475 Prescriptions Iunreimbursed by insurance) $ 255 Real property taxes on residence owned by her $8,950 Mortgage interest on residence (Form 1098 received) $9,845 Contribution of stock to the American Lung Association $ 600 Basis; FMV at date of donation $550. Long-term Contribution of land to the Habitat for Humanity $10,000 Basis; FMV $15,000. Short-term Maggie had the following activity in their brokerage account during the year (all transactions were reported on a Form 1099-8. Basis information on each stock sale was reported to the IRS): Sold 2,000 shares of Microsoft 7/1/2020 $22,500 Sold=7shares of Apple, Inc. 4/15/2020 $28,750 Sold 3150 shares of Cooper Tire 10/14/2020 $14,700 Sold 1 ,000 shares of Cardinal Health 1 1/10/2020 $23,500 Relevant tax basis/holding period information related to sales of securities in the current year: Purchased 2,000 shares of Microsoft on 8/1/19 for $21 ,000 Purchased 200 shares of Apple, Inc. on 3/8/14 for $40,000 Purchased 350 shares of Cooper Tire on 1/12/13 for $9,000 Received 1,000 shares of Cardinal Health from Maggie's father as a gift on 10/10/2010. Her father's basis in the stock at the time of the gift was $17,500. Fair market value of the stock at the date of the gift was ' $27,000. Her father paid gift tax of $2,000. Maggie has a $7,000 short-term capital loss carryover from the prior tax year
