John and Sandy Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2019, John worked as a computer technician at a local university earning a salary of $152,000, and Sandy worked part-time as a receptionist for a law firm earning a salary of $29,000. John also does some Web design work on the side and reported revenues of $4,000 and associated expenses of $750. Johns business is not a specified business for the purpose of QBI deduction. The Fergusons received $800 in qualified dividends and a $200 refund of their state income taxes. The Fergusons always itemize their deductions and their itemized deductions were well over the standard deduction amount last year. The Fergusons had qualifying insurance for purposes of the Affordable Care Act (ACA). Use Exhibit 8-9, Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference. The Fergusons reported making the following payments during the year: State income taxes of $4,400. Federal tax withholding of $21,000. Alimony payments to Johns former wife of $10,000 (divorced in 2014). Child support payments for Johns child with his former wife of $4,100. $12,200 of real property taxes. Sandy was reimbursed $600 for employee business expenses she incurred. She was required to provide documentation for her expenses to her employer. $3,600 to Kid Care day care center for Samanthas care while John and Sandy worked. $14,000 interest on their home mortgage ($400,000 acquisition debt). $3,000 interest on a $40,000 home-equity loan. They used the loan to pay for a family vacation and new car. $15,000 cash charitable contributions to qualified charities. Donation of used furniture to Goodwill. The furniture had a fair market value of $400 and cost $2,000.

Page 2 07 21,397 Form 1040 (2018) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach Form(s) W-2. 2a Tax-exempt interest b Taxable interest Also attach Form(s) W-2G and 1099-R if b Ordinary 3a Qualified dividends tax was withheld. dividends 4a IRAs, pensions, and annuities b Taxable amount 5a Social security benefits 5a b Taxable amount Standard deduction for- 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6, otherwise, subtract Schedule 1, Single or Married line 36, from line 6 filing separately, $12.000 8 Standard deduction or itemized deductions (from Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-O- Married filing jointly or Qualifying 11 a Tax (see inst.) 21,397 (check if any from: 1. Form(s) 8814 2. Form 4972 widow(er), $24,000 13. b Add any amount from Schedule 2 and check here 12 a Child tax credit/credit for other Head of 2,000 dependents household, $18,000 b Add any amount from Schedule 3 and check here 13 Subtract line 12 from line 11. If zero or less, enter- 14 Other taxes. Attach Schedule 4 If you checked any 15 Total tax. Add lines 13 and 14 box under Standard 16 Federal income tax withheld from Forms W-2 and 1099 deduction, see instructions. 17 Refundable b Sch. 8812 credits: a EIC (see inst.) c Form 8863 Add any amount from Schedule 5 18 Add lines 16 and 17. These are your total payments. Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid 20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here > Routing Type: Checking Savings Direct deposit? See number instructions. d Account number 21 Amount of line 19 you want applied to your 2019 estimated tax 21 Amount You 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Owe 23 Estimated tax penalty (see instructions) 23 Go to www.irs.gov/Form1040 for instructions and the latest information. 2,600 18,797 87 18,884 20a 22 Form 1040 (2018) Schedule 1 of Form 1040. Additional Income and Adjustments to Income OMB No. 1545-0074 SCHEDULE 1 (Form 1040) Department of the Treasury Internal Revenue Service Name(s) shown on Form 1040 2018 Attach to Form 1040. Go to www.irs.gov/Form 1040 for instructions and the latest information. Attachment Sequence No. 01 Your social security number 1-96 10 1 Additional 1-9 b Reserved Income 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimony received 12 Business income or loss). Attach Schedule C or C-EZ 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 14 Other gains or losses). Attach Form 4797 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 18 Farm income or loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 Adjustments 23 Educator expenses to Income 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 25 Health savings account deduction. Attach Form 8889 26 Moving expenses for members of the armed forces. Attach Form 3903 27 Deductible part of self-employment tax. Attach Schedule SE 28 Self-employed SEP, SIMPLE, and qualified plans 29 Self-employed health insurance deduction 30 Penalty on early withdrawal of savings 31a Alimony paid b Recipient's SSN 32 IRA deduction 33 Student loan interest deduction 34 Reserved 35 Reserved 36 Add lines 23 through 35 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71479F 813 Schedule 1 (Form 1040) 2018 Schedule 3 of Form 1040. OMB No. 1545-0074 2018 SCHEDULE 3 Nonrefundable Credits (Form 1040) Department of the Treasury Attach to Form 1040. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 John and Sandy Ferguson Nonrefundable 48 Foreign tax credit. Attach Form 1116 if required Credits 49 Credit for child and dependent care expenses. Attach Form 2441 Attachment Sequence No. 03 Your social security number 48 2,310 500 50 Education credits from Form 8863, line 19 51 Retirement savings contributions credit. Attach Form 8880 52 Reserved 53 Residential energy credit. Attach Form 5695 54 Other credits from Form U a 3800 Ob 8801 55 Add the amounts in the far right column. Enter here and include on Form 1040, line 12 2.810 Schedule 4 of Form 1040. Other Taxes OMB No. 1545-0074 SCHEDULE 4 (Form 1040) Department of the Treasury Internal Revenue Service Name(s) shown on Form 1040 2018 Attach to Form 1040. Go to www.irs.gov/Form 1040 for instructions and the latest information Attachment Sequence No. 04 Your social security number Other Taxes 58 59 60a 57 Self-employment tax. Attach Schedule SE 58 Unreported social security and Medicare tax from: Forma 4137 Ob 8919 59 Additional tax on IRAs, other qualified retirement plans, and other tax-favored accounts. Attach Form 5329 if required 60a Household employment taxes. Attach Schedule H b Repayment of first-time homebuyer credit from Form 5405. Attach Form 5405 if required 61 Health care: individual responsibility (see instructions) 62 Tax from: Da Form 8959 b Form 8960 c Instructions, enter code(s) 63 Section 965 net tax liability installment from Form 965-A 632 64 Add the amounts in the far right column. These are your total other taxes. Enter here and on Form 1040, line 14 600 61 Form 6251 Alternative Minimum Tax-Individual OMB No. 1545-0074 2018 Department of the Treasury Internal Revenue Service (99) Name(s) shown on Form 1040 or Form 1040NR Go to www.irs.gov/Form 6251 for instructions and the latest information. Attach to Form 1040 or Form 1040NR. Attachment Sequence No. 32 Your social security number Partl Alternative Minimum Taxable Income (See instructions for how to complete each line.) 1 Enter the amount from Form 1040, line 10, if more than Zero. If Form 1040, line 10, is zero, subtract lines 8 and 9 of Form 1040 from line 7 of Form 1040 and enter the result here. (If less than zero, enter as a negative amount.) 2a If filing Schedule A (Form 1040), enter the taxes from Schedule A, line 7; otherwise, enter the amount from Form 1040, line 8 b Tax refund from Schedule 1 (Form 1040), line 10 or line 21 C Investment interest expense (difference between regular tax and AMT) d Depletion (Difference between regular tax and AMT) e Net operating loss deduction from Schedule 1 (Form 1040), line 21. Enter as a positive amount. f Alternative tax net operating loss deduction. g Interest from specified private activity bonds exempt from the regular tax h Qualified small business stock, see instructions i Exercise of incentive stock options (excess of AMT income over regular tax income) Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) k Disposition of property (Difference between AMT and regular tax gain or loss) Depreciation on assets placed in service after 1986 (Difference between regular tax and AMT) m Passive activities (difference between AMT and regular tax income or loss) n Loss limitations (difference between AMT and regular tax income or loss) O Circulation costs (difference between regular tax and AMT) P Long-term contracts (difference between AMT and regular tax income) q Mining costs (difference between regular tax and AMT) Research and experimental costs (difference between regular tax and AMT) s Income from certain installment sales before January 1, 1987 t Intangible drilling costs preference 3 Other adjustments, including income-based related adjustments 4 Alternative minimum taxable income. Combine lines 1 through 3. (If married filing separately and line 4 is more than $718,800, see instructions.) Part II Alternative Minimum Tax (AMT) 5 Exemption. (If you were under age 24 at the end of 2018, see instructions.) IF your filing status is... AND line 4 is not over... THEN enter on line 5... Single or head of household 500,000 70,300 Married filing jointly or qualifying widow(er) 1,000,000 109,400 Married filing separately 500,000 54,700 Page 2 07 21,397 Form 1040 (2018) 1 Wages, salaries, tips, etc. Attach Form(s) W-2 Attach Form(s) W-2. 2a Tax-exempt interest b Taxable interest Also attach Form(s) W-2G and 1099-R if b Ordinary 3a Qualified dividends tax was withheld. dividends 4a IRAs, pensions, and annuities b Taxable amount 5a Social security benefits 5a b Taxable amount Standard deduction for- 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6, otherwise, subtract Schedule 1, Single or Married line 36, from line 6 filing separately, $12.000 8 Standard deduction or itemized deductions (from Schedule A) 9 Qualified business income deduction (see instructions) 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-O- Married filing jointly or Qualifying 11 a Tax (see inst.) 21,397 (check if any from: 1. Form(s) 8814 2. Form 4972 widow(er), $24,000 13. b Add any amount from Schedule 2 and check here 12 a Child tax credit/credit for other Head of 2,000 dependents household, $18,000 b Add any amount from Schedule 3 and check here 13 Subtract line 12 from line 11. If zero or less, enter- 14 Other taxes. Attach Schedule 4 If you checked any 15 Total tax. Add lines 13 and 14 box under Standard 16 Federal income tax withheld from Forms W-2 and 1099 deduction, see instructions. 17 Refundable b Sch. 8812 credits: a EIC (see inst.) c Form 8863 Add any amount from Schedule 5 18 Add lines 16 and 17. These are your total payments. Refund 19 If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid 20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here > Routing Type: Checking Savings Direct deposit? See number instructions. d Account number 21 Amount of line 19 you want applied to your 2019 estimated tax 21 Amount You 22 Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions Owe 23 Estimated tax penalty (see instructions) 23 Go to www.irs.gov/Form1040 for instructions and the latest information. 2,600 18,797 87 18,884 20a 22 Form 1040 (2018) Schedule 1 of Form 1040. Additional Income and Adjustments to Income OMB No. 1545-0074 SCHEDULE 1 (Form 1040) Department of the Treasury Internal Revenue Service Name(s) shown on Form 1040 2018 Attach to Form 1040. Go to www.irs.gov/Form 1040 for instructions and the latest information. Attachment Sequence No. 01 Your social security number 1-96 10 1 Additional 1-9 b Reserved Income 10 Taxable refunds, credits, or offsets of state and local income taxes 11 Alimony received 12 Business income or loss). Attach Schedule C or C-EZ 13 Capital gain or loss). Attach Schedule D if required. If not required, check here 14 Other gains or losses). Attach Form 4797 15a Reserved 16a Reserved 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 18 Farm income or loss). Attach Schedule F 19 Unemployment compensation 20a Reserved 21 Other income. List type and amount 22 Combine the amounts in the far right column. If you don't have any adjustments to income, enter here and include on Form 1040, line 6. Otherwise, go to line 23 Adjustments 23 Educator expenses to Income 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 25 Health savings account deduction. Attach Form 8889 26 Moving expenses for members of the armed forces. Attach Form 3903 27 Deductible part of self-employment tax. Attach Schedule SE 28 Self-employed SEP, SIMPLE, and qualified plans 29 Self-employed health insurance deduction 30 Penalty on early withdrawal of savings 31a Alimony paid b Recipient's SSN 32 IRA deduction 33 Student loan interest deduction 34 Reserved 35 Reserved 36 Add lines 23 through 35 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 71479F 813 Schedule 1 (Form 1040) 2018 Schedule 3 of Form 1040. OMB No. 1545-0074 2018 SCHEDULE 3 Nonrefundable Credits (Form 1040) Department of the Treasury Attach to Form 1040. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 John and Sandy Ferguson Nonrefundable 48 Foreign tax credit. Attach Form 1116 if required Credits 49 Credit for child and dependent care expenses. Attach Form 2441 Attachment Sequence No. 03 Your social security number 48 2,310 500 50 Education credits from Form 8863, line 19 51 Retirement savings contributions credit. Attach Form 8880 52 Reserved 53 Residential energy credit. Attach Form 5695 54 Other credits from Form U a 3800 Ob 8801 55 Add the amounts in the far right column. Enter here and include on Form 1040, line 12 2.810 Schedule 4 of Form 1040. Other Taxes OMB No. 1545-0074 SCHEDULE 4 (Form 1040) Department of the Treasury Internal Revenue Service Name(s) shown on Form 1040 2018 Attach to Form 1040. Go to www.irs.gov/Form 1040 for instructions and the latest information Attachment Sequence No. 04 Your social security number Other Taxes 58 59 60a 57 Self-employment tax. Attach Schedule SE 58 Unreported social security and Medicare tax from: Forma 4137 Ob 8919 59 Additional tax on IRAs, other qualified retirement plans, and other tax-favored accounts. Attach Form 5329 if required 60a Household employment taxes. Attach Schedule H b Repayment of first-time homebuyer credit from Form 5405. Attach Form 5405 if required 61 Health care: individual responsibility (see instructions) 62 Tax from: Da Form 8959 b Form 8960 c Instructions, enter code(s) 63 Section 965 net tax liability installment from Form 965-A 632 64 Add the amounts in the far right column. These are your total other taxes. Enter here and on Form 1040, line 14 600 61 Form 6251 Alternative Minimum Tax-Individual OMB No. 1545-0074 2018 Department of the Treasury Internal Revenue Service (99) Name(s) shown on Form 1040 or Form 1040NR Go to www.irs.gov/Form 6251 for instructions and the latest information. Attach to Form 1040 or Form 1040NR. Attachment Sequence No. 32 Your social security number Partl Alternative Minimum Taxable Income (See instructions for how to complete each line.) 1 Enter the amount from Form 1040, line 10, if more than Zero. If Form 1040, line 10, is zero, subtract lines 8 and 9 of Form 1040 from line 7 of Form 1040 and enter the result here. (If less than zero, enter as a negative amount.) 2a If filing Schedule A (Form 1040), enter the taxes from Schedule A, line 7; otherwise, enter the amount from Form 1040, line 8 b Tax refund from Schedule 1 (Form 1040), line 10 or line 21 C Investment interest expense (difference between regular tax and AMT) d Depletion (Difference between regular tax and AMT) e Net operating loss deduction from Schedule 1 (Form 1040), line 21. Enter as a positive amount. f Alternative tax net operating loss deduction. g Interest from specified private activity bonds exempt from the regular tax h Qualified small business stock, see instructions i Exercise of incentive stock options (excess of AMT income over regular tax income) Estates and trusts (amount from Schedule K-1 (Form 1041), box 12, code A) k Disposition of property (Difference between AMT and regular tax gain or loss) Depreciation on assets placed in service after 1986 (Difference between regular tax and AMT) m Passive activities (difference between AMT and regular tax income or loss) n Loss limitations (difference between AMT and regular tax income or loss) O Circulation costs (difference between regular tax and AMT) P Long-term contracts (difference between AMT and regular tax income) q Mining costs (difference between regular tax and AMT) Research and experimental costs (difference between regular tax and AMT) s Income from certain installment sales before January 1, 1987 t Intangible drilling costs preference 3 Other adjustments, including income-based related adjustments 4 Alternative minimum taxable income. Combine lines 1 through 3. (If married filing separately and line 4 is more than $718,800, see instructions.) Part II Alternative Minimum Tax (AMT) 5 Exemption. (If you were under age 24 at the end of 2018, see instructions.) IF your filing status is... AND line 4 is not over... THEN enter on line 5... Single or head of household 500,000 70,300 Married filing jointly or qualifying widow(er) 1,000,000 109,400 Married filing separately 500,000 54,700