Individual Tax Return Problem Required: Use the following information to complete Paige Turners 2020 federal income tax return. If any information is missing, use reasonable assumptions to fill in the gaps. Facts: 1. Paige Turner is single and has two children from her previous marriage. Ali lives with Paige, and Paige provides more than half of her support. Leif lives with his father, Will (Leif lived with Will for all of 2020). Will provides more than half of Leifs support. Paige provides you with the following additional information: o She uses the cash method of accounting and a calendar year for reporting. o She wishes to contribute to the presidential election campaign. o Paige lives at 523 Essex Street, Bangor, Maine 04401. o Paiges birthday is May 31, 1982. o Alis birthday is October 5, 2011. o Leifs birthday is December 1, 2009. o Paiges Social Security number is 007-11-4727. o Alis Social Security number is 005-11-7232. o Leifs Social Security number is 004-22-3419. o Wills Social Security number is 006-33-6333. o She does not have any foreign bank accounts or trusts. 2. Paige is employed as a nuclear engineer with Atom Systems Consultants, Inc. (ASCI). ASCIs federal employer identification number is 79-1234466. Paiges pay stubs indicate that she had $4,230 withheld in federal taxes, and $4,987 in state taxes, as well as the appropriate Social Security and Medicare taxes. ASCI has an extensive fringe benefits program for its employees. 3. Paige 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. ASCI paid $397 of whole life insurance premiums to cover Paiges personal whole life insurance policy. ASCI also paid health club dues of $900 to a nearby health club on Paiges behalf. 5. Taking advantage of ASCIs educational assistance program, during the fall Paige enrolled in two graduate engineering classes at a local college. ASCI paid her tuition, fees, and other course-related costs of $2,300. 6. Paige received free parking in the companys security garage that would normally cost $200 per month. 7. Paige manages the safety program for ASCI. In recognition of her superior handling of three potential crises during the year, Paige was awarded the Employee Safety Award on December 15. The cash award was $500. 8. On January 15, 2020, Paiges 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. Paige 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: EXHIBIT A This is important tax information and is being furnished to the Internal Revenue Service. 1099-DIV Dividends and Distributions Entity Description Amount General Dynamics Ordinary/qualified dividends $300

1099-INT Interest

Entity Description Amount New Jersey Economic Development (bonds) Interest $300 IBM Interest 700 State of Nebraska (bonds) Interest 700

1098 - Mortgage Interest Statement Entity Description Amount Sunbelt Credit Union Mortgage interest $7,100 Northeast Bank Mortgage interest 435

Form K-1 (preliminary) Entity Description Amount Grubstake Mining & Development Corp. Ordinary income $2,000 Distribution 1,000

10. Paige owns 1,000 shares of Grubstake Mining & Development common stock. Grubstake is organized as an S corporation and has 100,000 shares outstanding (S corp. ID number 45-4567890). Grubstake reported taxable income of $200,000 and paid a distribution of $1.00 per share during the current year. Paige tells you that Grubstake typically does not send out its K-1 reports until late April. However, its preliminary report (see Exhibit A) has been consistent with the K-1 for many years. Paige does not materially participate in Grubstakes activities. 11. Paige 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. ASCI continued to pay her salary during the two weeks she missed because of the accident and also paid her $1,200 in disability pay for the time she was unable to work. Under its plan, ASCI pays the premiums for the disability insurance as a nontaxable fringe benefit. 12. Paige received a Form 1099-B from her broker for the sale of the following securities during 2020. The basis amounts were reported to the IRS.

security	sales date	purhase date	sales price	her basis
nebraska state bonds	3/14/2020	10/22/2014	2,300	1890
Casill corp(500 shares)	10/20/2020	2/19/2018	8,500	9760

13. In addition to the taxes withheld from her salary, Paige 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. Paige would like to receive a refund for any overpayment. 14. Because of her busy work schedule, Paige 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 15, 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. Paige 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, Paige received $1,200 from the tenant per the terms of the lease agreement. In November, the plumbing froze 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. Paige 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 Harvest Street, Orono, Maine 04473. Local practice is to allocate 12 percent of the fair market value of the property to the land. (See item #8.) Paige makes all decisions with respect to the property. 17. Paige 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. Paige 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 personal property tax to the state based on the fair market value of the car. 19. In addition to the medical costs presented in item #11, Paige 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, Paige took advantage of low interest rates and refinanced her $75,000 home mortgage with her original lender. Paige 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 Paiges 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. Paige received several Form 1098 statements from her bank for interest paid by her in 2020. Details appear below (also see Exhibit A): Primary home mortgage $7,100 Home-equity loan 435 Credit cards 498 Car loan 390 21. On May 14, 2020, Paige 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 Stone Ridge Road, Bangor, Maine 04401. In addition, she made the following cash contributions and received a statement from each of the following organizations acknowledging her contribution: Larkin College $850 United Way 125 First Methodist Church 790 Amos House (homeless shelter) 200 Local Chamber of Commerce 100 22. Paige 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 River Road, Bangor, Maine 04401). The name of her business is Turner Real Estate and the federal identification number is 05-8799561. Her business code is 531210. Paige 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 Real estate license 130 Rent 6,000 Utilities 695 23. Paige uses her 2018 Acura TL in her business. During 2020, she properly documented 6,000 business miles. 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, Paige 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. Paige did not buy, sell, exchange, or otherwise acquire any financial interest in a virtual currency. 25. Paige received two Recovery Rebate checks (stimulus payments) for the full amounts before filing her 2020 tax return.

Compute all necessary calculation to fill form 1040 (including Schedules 1,2,3,A,B,C,D,E, and SE) Form 4562 and form 8995

1040 Department of the Treasury - Internal Revenue Service (99) U.S. Individual Income Tax Return 2020 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. Filing Status Single Married filing jointly Married filing separately (MFS) Head of household (HOH) | Qualifying widower) (QW) Check only one box. If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent Your first name and middle initial Last name Your social security number If joint retum, spouse's first name and middle initial Last name Spouse's social security number ZIP code Last name to you Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign Check here if you, or your City, town, or post office. If you have a foreign address, also complete spaces below. spouse if filing jointly, want $3 State to go to this fund. Checking a box below will not change Foreign country name Foreign province/state/county Foreign postal code your tax or refund. You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship 14 V if qualifies for (see instructions): If more (1) First name number Child tax credit Credit for other dependents than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest b Taxable interest 2b Sch. Bif Qualified dividends 3a required. 3b b Ordinary dividends 4a IRA distributions 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 5b Standard 6a Social security benefits b Taxable amount 6b Deduction for 7 Capital gain or loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9. 8 separately, $12.400 9 Add lines 1, 2, 3, 4b, 5b, 6b, 7 and 8. This is your total income Married filing 10 Adjustments to income: jointly or Qualifying From Schedule 1, line 22 10a widow(er), $24.800 10b b Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household, $18,650 11 Subtract line 10c from line 9. This is your adjusted gross income If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13 14 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O- 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2020) 2a 9 a 11 see instructions Cat. No. 11320B Page 2 2 26 Form 1040 (2020) 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 30 16 17 Amount from Schedule 2, line 3 17 18 Add lines 16 and 17... 18 19 Child tax credit or credit for other dependents 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 22 Subtract line 21 from line 18. If zero or less, enter-O- 22 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 25 Federal income tax withheld from: a Form(s) W-2 25a b Form(s) 1099 25b c Other forms (see instructions) 25c d Add lines 25a through 250 25d If you have a 26 2020 estimated tax payments and amount applied from 2019 return qualifying child, 27 Earned income credit (EIC). 27 attach Sch. EIC. If you have 28 Additional child tax credit. Attach Schedule 8812 28 nontaxable 29 29 combat pay. American opportunity credit from Form 8863, line 8 see instructions. 30 Recovery rebate credit. See instructions. 30 31 Amount from Schedule 3, line 13 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 Add lines 25d, 26, and 32. These are your total payments 33 34 Refund 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a Direct deposit? Routing number Type: Checking Savings See instructions. d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for For details on how to pay, see 2020. See Schedule 3, line 12e, and its instructions for details. instructions. 38 Estimated tax penalty (see instructions) 38 Third Party Do you want to allow another person to discuss this return with the IRS? See Designee instructions Yes. Complete below. No Designee's Phone Personal identification number (PIN) Sign 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. Here Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? (see inst.) See instructions. Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent your spouse an Keep a copy for Identity Protection PIN, enter it here your records. (see inst.) AA 33 TIL the type checkin name no. Phone no. Email address 1040 Department of the Treasury - Internal Revenue Service (99) U.S. Individual Income Tax Return 2020 OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. Filing Status Single Married filing jointly Married filing separately (MFS) Head of household (HOH) | Qualifying widower) (QW) Check only one box. If you checked the MFS box, enter the name of your spouse. If you checked the HOH or QW box, enter the child's name if the qualifying person is a child but not your dependent Your first name and middle initial Last name Your social security number If joint retum, spouse's first name and middle initial Last name Spouse's social security number ZIP code Last name to you Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Presidential Election Campaign Check here if you, or your City, town, or post office. If you have a foreign address, also complete spaces below. spouse if filing jointly, want $3 State to go to this fund. Checking a box below will not change Foreign country name Foreign province/state/county Foreign postal code your tax or refund. You Spouse At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Standard Someone can claim: You as a dependent Your spouse as a dependent Deduction Spouse itemizes on a separate return or you were a dual-status alien Age/Blindness You: Were born before January 2, 1956 Are blind Spouse: Was born before January 2, 1956 Is blind Dependents (see instructions): (2) Social security (3) Relationship 14 V if qualifies for (see instructions): If more (1) First name number Child tax credit Credit for other dependents than four dependents, see instructions and check here 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 Attach 2a Tax-exempt interest b Taxable interest 2b Sch. Bif Qualified dividends 3a required. 3b b Ordinary dividends 4a IRA distributions 4a b Taxable amount 4b 5a Pensions and annuities 5a b Taxable amount 5b Standard 6a Social security benefits b Taxable amount 6b Deduction for 7 Capital gain or loss). Attach Schedule D if required. If not required, check here 7 Single or Married filing 8 Other income from Schedule 1, line 9. 8 separately, $12.400 9 Add lines 1, 2, 3, 4b, 5b, 6b, 7 and 8. This is your total income Married filing 10 Adjustments to income: jointly or Qualifying From Schedule 1, line 22 10a widow(er), $24.800 10b b Charitable contributions if you take the standard deduction. See instructions Head of Add lines 10a and 10b. These are your total adjustments to income 10c household, $18,650 11 Subtract line 10c from line 9. This is your adjusted gross income If you checked 12 Standard deduction or itemized deductions (from Schedule A) 12 any box under Standard 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 Deduction, 14 Add lines 12 and 13 14 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-O- 15 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2020) 2a 9 a 11 see instructions Cat. No. 11320B Page 2 2 26 Form 1040 (2020) 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 4972 30 16 17 Amount from Schedule 2, line 3 17 18 Add lines 16 and 17... 18 19 Child tax credit or credit for other dependents 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 22 Subtract line 21 from line 18. If zero or less, enter-O- 22 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 25 Federal income tax withheld from: a Form(s) W-2 25a b Form(s) 1099 25b c Other forms (see instructions) 25c d Add lines 25a through 250 25d If you have a 26 2020 estimated tax payments and amount applied from 2019 return qualifying child, 27 Earned income credit (EIC). 27 attach Sch. EIC. If you have 28 Additional child tax credit. Attach Schedule 8812 28 nontaxable 29 29 combat pay. American opportunity credit from Form 8863, line 8 see instructions. 30 Recovery rebate credit. See instructions. 30 31 Amount from Schedule 3, line 13 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 Add lines 25d, 26, and 32. These are your total payments 33 34 Refund 34 If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a Direct deposit? Routing number Type: Checking Savings See instructions. d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for For details on how to pay, see 2020. See Schedule 3, line 12e, and its instructions for details. instructions. 38 Estimated tax penalty (see instructions) 38 Third Party Do you want to allow another person to discuss this return with the IRS? See Designee instructions Yes. Complete below. No Designee's Phone Personal identification number (PIN) Sign 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. Here Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? (see inst.) See instructions. Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent your spouse an Keep a copy for Identity Protection PIN, enter it here your records. (see inst.) AA 33 TIL the type checkin name no. Phone no. Email address