Instructions Note: This problem is for the 2018 tax year. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2016. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. For 2018, he reported the following receipts. Salary $ 80,000 $300 Interest income- Money market account at Omni Bank Savings account at Bosne State Bank City of Springfield general purpose bonds Inheritance from Daniel 1,100 3,000 4,400 Life insurance proceeds 60,000 200,000 80,000 9,000 Amount from sale of St. Louis lot Proceeds from estate sale Federal income tax refund (for 2017 tax overpayment) 700 In 2018, Logan inherited securities worth $60,000 from his deceased uncle, Daniel. Logan also was the designated beneficiary of an insurance policy on Daniel's life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2, 2013, for $85,000 and held as an investment. Because the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2018, for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting X Instructions $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he received and has declined or staved the same in value since Sara and Daniel died. Logan's other 2018 expenditures include the following. $11,500 Medical expenses (including $10,500 for dental services) Taxes $4,200 4,500 8,700 State of Missouri income tax (includes withholdings) Property taxes on personal residence Interest on home mortgage Contribution to church (paid pledges for 2018 and 2019) 5,600 4,800 Logan and his dependent were covered by his employer's health insurance policy for all of 2018. However, he is subject to a deductible, and dental care is not included. The $10,500 dental charge was for Helen's implants. Helen is Logan's widowed mother, who lives with him (see below). Logan normally pledges $2,400 ($200 per month) each year to his church. On December 5, 2018, upon the advice of his pastor, he prepaid his pledge for 2019. Logan's household, all of whom he supports, includes the following. Social Security Number Birth Date Logan Tavlor (age 48) 123-45-6787 08/30/1970 Instructions Social Security Number Birth Date Logan Taylor (age 48) Helen Taylor (age 70) Asher Taylor (age 23) Mia Taylor (age 22) 123-45-6787 123-45-6780 123-45-6783 123-45-6784 08/30/1970 01/13/1948 07/18/1995 02/16/1996 Helen, Logan's mother, receives a modest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,500 was withheld from his wages. Required: Compute Logan's 2018 Federal income tax. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were withheld. Logan does not want to contribute to the Presidential Election Campaign Fund. Make realistic assumptions about any missing data. Enter all amounts as positive numbers except any losses. Use the minus sign to indicate a loss. If an amount box does not require an entry or the answer is zero, enter "0". It may be necessary to complete the other tax schedules before completing Form 1040. Use the included tax rate schedules to compute the tax. When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. 2018 Tax rate Schedules Use the 2018 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.) 2018 Tax Rate Schedules Single-Schedule X If taxable income is: Over- Head of household-Schedule Z If taxable income is: But not Over- over- of the amount over- But not over- of the amount over- The tax is: The tax is: $0 9,525 38,700 82,500 157,500 200,000 500,000 $9,525 38,700 82,500 157,500 200,000 500,000 ...... ...... 10% $952.50 + 12% 4,453.50 + 22% 14,089.50 + 24% 32,089.50 + 32% 45,689.50 + 35% 150,689.50 + 37% $0 9,525 38,700 82,500 $0 $13,600 ...... 10% 13,600 51,800 $1,360.00 + 12% 51,800 82,500 5,944.00 + 22% 82,500 157,500 12,698.00 + 24% 157,500 200,000 30,698.00 + 32% 200,000 500,000 44,298.00 + 35% 500,000 ...... 149,298.00 + 37% Married filing separately-Schedule Y-2 $0 13,600 51,800 82,500 157,500 200,000 500,000 157,500 200,000 500,000 Married filing jointly or Qualifying widow(er)-Schedule Y-1 If taxable of the If taxable of the 2018 Tax rate Schedules 82,500 157,500 200,000 500,000 157,500 200,000 500,000 ...... 12,698.00 + 24% 30,698.00 + 32% 44,298.00 + 35% 149,298.00 + 37% 82,500 157,500 200,000 500,000 82,500 157,500 14,089.50 + 24% 82,500 157,500 200,000 32,089.50 + 32% 157,500 200,000 500,000 45,689.50 + 35% 200,000 500,000 ...... 150,689.50 + 37% 500,000 Married filing jointly or Qualifying widow(er)-Schedule Y-1 If taxable of the income is: But not amount Over- over- The tax is: over- Married filing separately-Schedule Y-2 If taxable income is: Over- But not over- of the amount over- The tax is: $0 19,050 77,400 $0 9,525 38,700 Orar $9,525 38,700 82,500 $0 19,050 77,400 165,000 $19,050 77,400 165,000 315,000 400,000 600,000 ...... 165,000 ...... 10% $1,905.00 + 12% 8,907.00 + 22% 28,179.00 + 24% 64,179.00 + 32% 91,379.00 + 35% 161,379.00 + 37% 82,500 157,500 ...... 10% $952.50 + 12% 4,453.50 + 22% 14,089.50 + 24% 32,089.50 + 32% 45,689.50 + 35% 80,689.50 + 37% $0 9,525 38,700 82,500 157,500 200,000 300,000 315,000 315,000 200,000 300,000 400,000 600,000 157,500 200,000 300,000 400,000 600,000 Form 8949 Compute Logan's Form 8949 below. Note: Only page 2 of the form is required to be completed for this problem and is provided below. Form 8949 (2018) Attachment Sequence No. 12A Page 2 Name(s) shown on return. Name and SSN or taxpayer identification no. not required if shown on other side Logan B. Taylor SSN or taxpayer identification number 123-45-6787 Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part II Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see instructions). For short- term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 8a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-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. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) Form 8949 (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS . (F) Long-term transactions not reported to you on Form 1099-B (a) (c) (b) Description of property (Example: 100 sh. XYZ Co.) (h) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (9) Adjustment, if any, to gain or (e) loss. If you enter an amount in Cost or other column (g), enter a code in column basis. See the (f). See the separate instructions. Note below and see (f) (9) Column (e) in Code(s) from Amount of the separate instructions adjustment instructions (d) Proceeds (sales price) (see instructions) Date sold or disposed of (Mo., day, yr.) Date acquired (Mo., day, yr.) Land; St. Louis, MO 05/02/13 01/02/18 Form 8949 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 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (9) to correct the basis. See Column (9) in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2018) Instructions Note: This problem is for the 2018 tax year. Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2016. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. For 2018, he reported the following receipts. Salary $ 80,000 $300 Interest income- Money market account at Omni Bank Savings account at Bosne State Bank City of Springfield general purpose bonds Inheritance from Daniel 1,100 3,000 4,400 Life insurance proceeds 60,000 200,000 80,000 9,000 Amount from sale of St. Louis lot Proceeds from estate sale Federal income tax refund (for 2017 tax overpayment) 700 In 2018, Logan inherited securities worth $60,000 from his deceased uncle, Daniel. Logan also was the designated beneficiary of an insurance policy on Daniel's life with a maturity value of $200,000. The lot in St. Louis was purchased on May 2, 2013, for $85,000 and held as an investment. Because the neighborhood has deteriorated, Logan decided to cut his losses and sold the lot on January 5, 2018, for $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting X Instructions $80,000. The estate sale consisted largely of items belonging to Sara and Daniel (e.g., camper, boat, furniture, and fishing and hunting equipment). Logan estimates that the property sold originally cost at least twice the $9,000 he received and has declined or staved the same in value since Sara and Daniel died. Logan's other 2018 expenditures include the following. $11,500 Medical expenses (including $10,500 for dental services) Taxes $4,200 4,500 8,700 State of Missouri income tax (includes withholdings) Property taxes on personal residence Interest on home mortgage Contribution to church (paid pledges for 2018 and 2019) 5,600 4,800 Logan and his dependent were covered by his employer's health insurance policy for all of 2018. However, he is subject to a deductible, and dental care is not included. The $10,500 dental charge was for Helen's implants. Helen is Logan's widowed mother, who lives with him (see below). Logan normally pledges $2,400 ($200 per month) each year to his church. On December 5, 2018, upon the advice of his pastor, he prepaid his pledge for 2019. Logan's household, all of whom he supports, includes the following. Social Security Number Birth Date Logan Tavlor (age 48) 123-45-6787 08/30/1970 Instructions Social Security Number Birth Date Logan Taylor (age 48) Helen Taylor (age 70) Asher Taylor (age 23) Mia Taylor (age 22) 123-45-6787 123-45-6780 123-45-6783 123-45-6784 08/30/1970 01/13/1948 07/18/1995 02/16/1996 Helen, Logan's mother, receives a modest Social Security benefit. Asher, a son, is a full-time student in dental school and earns $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,500 was withheld from his wages. Required: Compute Logan's 2018 Federal income tax. If Logan has any overpayment on his income tax, he wants the refund sent to him. Assume that the proper amounts of Social Security and Medicare taxes were withheld. Logan does not want to contribute to the Presidential Election Campaign Fund. Make realistic assumptions about any missing data. Enter all amounts as positive numbers except any losses. Use the minus sign to indicate a loss. If an amount box does not require an entry or the answer is zero, enter "0". It may be necessary to complete the other tax schedules before completing Form 1040. Use the included tax rate schedules to compute the tax. When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. 2018 Tax rate Schedules Use the 2018 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.) 2018 Tax Rate Schedules Single-Schedule X If taxable income is: Over- Head of household-Schedule Z If taxable income is: But not Over- over- of the amount over- But not over- of the amount over- The tax is: The tax is: $0 9,525 38,700 82,500 157,500 200,000 500,000 $9,525 38,700 82,500 157,500 200,000 500,000 ...... ...... 10% $952.50 + 12% 4,453.50 + 22% 14,089.50 + 24% 32,089.50 + 32% 45,689.50 + 35% 150,689.50 + 37% $0 9,525 38,700 82,500 $0 $13,600 ...... 10% 13,600 51,800 $1,360.00 + 12% 51,800 82,500 5,944.00 + 22% 82,500 157,500 12,698.00 + 24% 157,500 200,000 30,698.00 + 32% 200,000 500,000 44,298.00 + 35% 500,000 ...... 149,298.00 + 37% Married filing separately-Schedule Y-2 $0 13,600 51,800 82,500 157,500 200,000 500,000 157,500 200,000 500,000 Married filing jointly or Qualifying widow(er)-Schedule Y-1 If taxable of the If taxable of the 2018 Tax rate Schedules 82,500 157,500 200,000 500,000 157,500 200,000 500,000 ...... 12,698.00 + 24% 30,698.00 + 32% 44,298.00 + 35% 149,298.00 + 37% 82,500 157,500 200,000 500,000 82,500 157,500 14,089.50 + 24% 82,500 157,500 200,000 32,089.50 + 32% 157,500 200,000 500,000 45,689.50 + 35% 200,000 500,000 ...... 150,689.50 + 37% 500,000 Married filing jointly or Qualifying widow(er)-Schedule Y-1 If taxable of the income is: But not amount Over- over- The tax is: over- Married filing separately-Schedule Y-2 If taxable income is: Over- But not over- of the amount over- The tax is: $0 19,050 77,400 $0 9,525 38,700 Orar $9,525 38,700 82,500 $0 19,050 77,400 165,000 $19,050 77,400 165,000 315,000 400,000 600,000 ...... 165,000 ...... 10% $1,905.00 + 12% 8,907.00 + 22% 28,179.00 + 24% 64,179.00 + 32% 91,379.00 + 35% 161,379.00 + 37% 82,500 157,500 ...... 10% $952.50 + 12% 4,453.50 + 22% 14,089.50 + 24% 32,089.50 + 32% 45,689.50 + 35% 80,689.50 + 37% $0 9,525 38,700 82,500 157,500 200,000 300,000 315,000 315,000 200,000 300,000 400,000 600,000 157,500 200,000 300,000 400,000 600,000 Form 8949 Compute Logan's Form 8949 below. Note: Only page 2 of the form is required to be completed for this problem and is provided below. Form 8949 (2018) Attachment Sequence No. 12A Page 2 Name(s) shown on return. Name and SSN or taxpayer identification no. not required if shown on other side Logan B. Taylor SSN or taxpayer identification number 123-45-6787 Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-B. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. Part II Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see instructions). For short- term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 8a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-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. (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) Form 8949 (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS . (F) Long-term transactions not reported to you on Form 1099-B (a) (c) (b) Description of property (Example: 100 sh. XYZ Co.) (h) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (9) Adjustment, if any, to gain or (e) loss. If you enter an amount in Cost or other column (g), enter a code in column basis. See the (f). See the separate instructions. Note below and see (f) (9) Column (e) in Code(s) from Amount of the separate instructions adjustment instructions (d) Proceeds (sales price) (see instructions) Date sold or disposed of (Mo., day, yr.) Date acquired (Mo., day, yr.) Land; St. Louis, MO 05/02/13 01/02/18 Form 8949 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 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (9) to correct the basis. See Column (9) in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2018)