Individual Tax Return - Moana Motunui Required: Use the following information to complete Moana Motunuis 2020 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Any required forms, schedules, and instructions can be found at the IRS website (www.irs.gov). The instructions can be helpful in completing the forms. Facts: 1. Moana Motunui is single and has two children from her previous marriage. Tala lives with Moana, and Moana provides more than half of her support. Pua lives with his father, Maui (Pua lived with Maui for all of 2020). Maui provides more than half of Pua's support. Moana provides you with the following additional information: She uses the cash method of accounting and a calendar year for reporting. She wishes to contribute to the presidential election campaign. Moana lives at 523 Matai Vasa Avenue, Honolulu, Hawaii 96819. Moanas birthday is May 31, 1982. Talas birthday is October 5, 2011. Puas birthday is December 1, 2009. Moanas Social Security number is 007-XX-4727. Talas Social Security number is 005-XX-7232. Puas Social Security number is 004-XX-3419. Mauis Social Security number is 006-XX-6333. She does not have any foreign bank accounts or trusts. 2. Moana is employed as a nuclear engineer with Fission Systems Consultants, Inc. (FSCI). FSCIs federal employer identification number is 79-1234466. Moanas pay stubs indicate that she had $4,230 withheld in federal taxes, $4,987 in state taxes, $4,495 in Social Security taxes, and $1,051 in Medicare taxes. FSCI has an extensive fringe benefits program for its employees. 3. Moana earned salary of $70,000 [before subtracting her 401(k) and flexible spending plan contributions]. She contributed $7,000 to her 401(k) account, and she contributed $2,500 to her flexible spending account. 4. FSCI paid $397 of whole life insurance premiums to cover Moana's personal whole life insurance policy. FSCI also paid health club dues of $900 to a nearby health club on Moana's behalf. 5. Taking advantage of FSCIs educational assistance program, during the fall Moana enrolled in two graduate engineering classes at a local college. FSCI paid her tuition, fees, and other course-related costs of $2,300.

6. Moana received free parking in the companys security garage that would normally cost $200 per month. 7. Moana manages the safety program for FSCI. In recognition of her superior handling of three potential crises during the year, Moana was awarded the Employee Safety Award on December 15. The cash award was $500. 8. On January 15, 2020, Moanas father died. From her fathers estate, she received stock valued at $30,000 (his basis was $12,000) and her fathers house valued at $90,000 (his basis in the house was $55,000). 9. Moana owns several other investments and in February 2021 received a statement from her brokerage firm reporting the interest and dividends earned on the investments for 2020.(See Exhibit A.) EXHIBIT A Forms 1099 and 1098 This is important tax information and is being furnished to the Internal Revenue Service. Te Fiti Development: preliminary report (preliminary K-1) to Moana for the 2020 tax year: Distribution to shareholder $1,000 Ordinary income (1% of $200,000) 2,000 10. In addition to the investments discussed above, Moana owns 1,000 shares of Te Fiti Development common stock. Te Fiti is organized as an S corporation and has 100,000 shares outstanding (S corp. ID number 45-4567890). Te-Fiti reported

taxable income of $200,000 and paid a distribution of $1.00 per share during the current year. Moana tells you that Te-Fiti typically does not send out its K-1 reports until late April. However, its preliminary report has been consistent with the K-1 for many years. (See Exhibit A.) Moana does not materially participate in Te-Fiti's activities. 11. Moana slipped on a wet spot in front of a computer store last July. She broke her ankle and was unable to work for two weeks. She incurred $1,300 in medical costs, all of which were paid by the owner of the store. The store also gave her $1,000 for pain and suffering resulting from the injury. FSCI continued to pay her salary during the two weeks she missed because of the accident. FSCIs plan also paid her $1,200 in disability pay for the time she was unable to work. Under this plan FSCI pays the premiums for the disability insurance as a taxable fringe benefit. 12. Moana received a Form 1099-B from her broker for the sale of the following securities during 2020. The adjusted basis amounts were reported to the IRS. Security Sales Date Purchase Date Sales Price Her Basis Nebraska state bonds 03/14/2020 10/22/2014 $2,300 $1,890 Cassill Corp (500 shares) 10/20/2020 02/19/2018 8,500 9,760 13. In addition to the taxes withheld from her salary, Moana also made timely estimated federal tax payments of $175 per quarter and timely estimated state income tax payments of $150 for the first three quarters. The $150 fourth-quarter state payment was made on December 28, 2020. Moana would like to receive a refund for any overpayment. 14. Because of her busy work schedule, Moana was unable to provide her accountant with the tax documents necessary for filing her 2019 state and federal income tax returns by the due date (July 17, 2020). In filing her extension on July 13, 2020, she made a federal tax payment of $750. Her return was eventually filed on September 25, 2020. In November 2020, she received a federal refund of $180 and a state tax refund of $60. Her itemized deductions for 2019 were $12,430. 15. Moana found a renter for her fathers house on August 1. The monthly rent is $400, and the lease agreement is for one year. The lease requires the tenant to pay the first and last months rent and a $400 security deposit. The security deposit is to be returned at the end of the lease if the property is in good condition. On August 1, Moana received $1,200 from the tenant per the terms of the lease agreement. In November, the plumbing froze after an unusual cold spell and several pipes burst. The tenant had the repairs made and paid the $300 bill. In December, he reduced his rental payment to $100 to compensate for the plumbing repairs. Moana provides you with the following additional information for the rental in 2020: Property taxes $770 Other maintenance expenses 285 Insurance expense 495

Management fee 350 Depreciation (to be computed) ? 16. The rental property is located at 35 Sina Street, Honolulu, Hawaii 96819. Local practice is to allocate 12 percent of the fair market value of the property to the land. (See item #8.) Moana makes all decisions with respect to the property. 17. Moana paid $2,050 in real estate taxes on her principal residence. The real estate tax is used to pay for town schools and other municipal services. 18. Moana drives a 2018 Acura TL. Her car registration fee (based on the car year) is $50 and covers the period 1/1/2020 through 12/31/2020. In addition, she paid $280 in property tax to the state based on the book value of the car. 19. In addition to the medical costs presented in item #11, Moana incurred the following unreimbursed medical costs: Dentist $ 310 Doctor 390 Prescription drugs 215 Over-the-counter drugs 140 Optometrist 125 Emergency room charges 440 LASIK eye surgery 6,000 Chiropractor 265 20. On March 1, Moana took advantage of low interest rates and refinanced her $75,000 home mortgage with her original lender. Moana purchased the home in 2018. The new home loan is for 15 years. She paid $215 in closing costs and $1,500 in discount points (prepaid interest) to obtain the loan. The house is worth $155,000 and Moana's basis in the house is $90,000. As part of the refinancing arrangement, she also obtained a $10,000 home- equity loan. She used the proceeds from the home-equity loan to reduce the balance due on her credit cards. Moana received several Form 1098 statements from her bank for interest paid by her in 2020. Details appear below. (See also Exhibit A.) Primary home mortgage $7,100 Home-equity loan 435 Credit cards 498 Car loan 390 21. On May 14, 2020, Moana contributed clothing to the Salvation Army. The original cost of the clothing was $740. She has substantiation valuing the donation at $360. The Salvation Army is located at 350 Tamatoa Road, Honolulu, HI 96819. In addition, she made

the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: $850 125 Kapi'olani Community College United Way First Methodist Church 790 Amos House (homeless shelter) 200 Local Chamber of Commerce 100 22. Moana sells real estate in the evening and on weekends (considered an active trade or business). She runs her business from a rental office she shares with several other realtors (692 Oceanview Road, Honolulu, HI 96819). The name of her business is Motunui Real Estate and the federal identification number is 05-8799561. Her business code is 531210. Moana has been operating in a business-like way since 2008 and has always shown a profit. She had the following income and expenses from her business: Commissions earned $21,250 Expenses: Advertising 2,200 Telephone 95 Real estate license 130 Rent 6,000 Utilities 600 23. Moana has used her Acura TL in her business since July 1, 2020. During 2020, she properly documented 6,000 business miles (1,000 miles each month). The total mileage on her car (i.e., for both business and personal use) during the year was 15,000 miles (including 200 miles commuting to and from the real estate office). In 2020, Moana elects to use the standard mileage method to calculate her car expenses. She spent $45 on tolls and $135 on parking related to the real estate business. 24. Moana did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency.