Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2018. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. During 2020 , he had the following receipts: Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2020. 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 2,2015 , 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 , 2020, for $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 stayed the same in value since Sara and Daniel died. Logan's expenditures for 2020 include the following: While Logan and his dependents are covered by his employer's health insurance policy, 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 5,2020 , upon the advice of his pastor, he prepaid his pledge for 2021 . Logan's household, all of whom he supports, includes the following: Logan's husehold, all of whom he supparts, indudes the following: Helen receives a modest Social Security benefit. Asher, a son, is a full-tima student in dental school and eams $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,200 was withheld Irom his wages. Required: Compute Logan's incorne tax for 2020. If Logan has any overpayment an his income tax, he wants the refund sent to him. Assurne that the proper amounts of Sodal Security and Medicare taxes were witheld. Logan received the appropriate corvenavirus recovery rebates (economic impact payments); related questions in Proconnect Tax should be ignored. Logan does not own and did not use any virtual currency during the year, and he 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. BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for adafitional requirements for reporting your gain or loss. Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for adafitional requirements for reporting your gain or loss. Part II Long-Term Capital Gains and Losses - Generally Assets Held More Than One Year (See instructions) BAA For Paperwork Reduction Act Notice, see your tax return instructions. \begin{tabular}{l} Sthedule D (Form 1040) 2020 \\ \hline Part III Summary \\ \hline 16 Combine lines 7 and 15 and enter the result. \end{tabular} - Ir line 16 is a gain, enter the amount from line 16 on Form 1040,10405R, or 1040-NR, line 7. Then, ga to line 17 below. - Ir line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22. - Ir line 16 is zero, skip lines 17 through 21 below and enter - 0 - on Form 1040,10405R, or 1040NR, line 7. Then, go to line 22. 17 Are lines 15 and 16 both gains? - Yes. Go to line 18. [ No. Skip lines 18 through 21 , and go to line 22 . 18 If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet. 19 If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions). enter the arrount, if any, from line 18 of that worksheet. 20 Are lines 18 and 19 both zero or blank and are you not filing Form 4952 ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forris 1040 and 10405R, line 16 . Don't complete lines 21 and 22 below. [ No. Complete the Schedule D Tax Worksheet in the instructioris. Don't camplete tines 21 aril 22 below. 21 If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7 , the smaller of: - The lass on line 16; ar - (53,000), or if married faling separately, (51,500) Notes When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040, 1040-5R, or 1040-NR, Fine 3a? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 10405R, line 16. No. Cornplete the rest of Form 1040, 1040-SR, or 1040-NR. Schedule D (Form 1040) 2020 enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to ligure the amount of the adjustment. Form 8949(2020) F eacheck T Chack My work l ricatrtat. 2020 Tisx rate Schedulas Use the 2020 Tax Rate Schedules to cornpute 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.) In early 2021, the following take place: - Helen decides that she wants to live with one of ber daughters and moves to Arizona. - Asher graduates from dental school and joirs an existing practice in St. Louis. - Mia marries, and she and her spouse move in with his parents. - Using the insurance proceeds he received on Daniel's death, Logan pays off the mortgage on his personal residence. Logan beseves that these events may have an effect on his tax position for 2021. Therefore, he requests your advice. Complete the letter to Logan explaining in general terms the changes that will occur for tax purposes. Assume that Logaris salary and other factors not mentioned (e.g. property and state income taxes) will remain the same. The standard deduction for qualifying widower is $25,100, for head of household $18,800 and for single $12,550 in 2021. Use the 2021 tax rate schedules (click here) in projecting Logan's tax for 2021. - Your filing status moves from surviving spouse to . The result is a shift from the - The capital loss deduction is a x which is 4x less than last year. - For various reasons, no longer qualify as dependents. - Because of these changes you will benefit from Based on last year's data, an estimate of your Federal income tax liability for 2021 is . If I can be of further assistance to you in this matter, please do not hesitate to contact me Sirkerely, Eduardo Rodrique2 Logan B. Taylor is a widower whose wife, Sara, died on June 6, 2018. He lives at 4680 Dogwood Lane, Springfield, MO 65801. He is employed as a paralegal by a local law firm. During 2020 , he had the following receipts: Logan inherited securities worth $60,000 from his uncle, Daniel, who died in 2020. 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 2,2015 , 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 , 2020, for $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 stayed the same in value since Sara and Daniel died. Logan's expenditures for 2020 include the following: While Logan and his dependents are covered by his employer's health insurance policy, 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 5,2020 , upon the advice of his pastor, he prepaid his pledge for 2021 . Logan's household, all of whom he supports, includes the following: Logan's husehold, all of whom he supparts, indudes the following: Helen receives a modest Social Security benefit. Asher, a son, is a full-tima student in dental school and eams $4,500 as a part-time dental assistant. Mia, a daughter, does not work and is engaged to be married. Federal income tax of $4,200 was withheld Irom his wages. Required: Compute Logan's incorne tax for 2020. If Logan has any overpayment an his income tax, he wants the refund sent to him. Assurne that the proper amounts of Sodal Security and Medicare taxes were witheld. Logan received the appropriate corvenavirus recovery rebates (economic impact payments); related questions in Proconnect Tax should be ignored. Logan does not own and did not use any virtual currency during the year, and he 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. BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for adafitional requirements for reporting your gain or loss. Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for adafitional requirements for reporting your gain or loss. Part II Long-Term Capital Gains and Losses - Generally Assets Held More Than One Year (See instructions) BAA For Paperwork Reduction Act Notice, see your tax return instructions. \begin{tabular}{l} Sthedule D (Form 1040) 2020 \\ \hline Part III Summary \\ \hline 16 Combine lines 7 and 15 and enter the result. \end{tabular} - Ir line 16 is a gain, enter the amount from line 16 on Form 1040,10405R, or 1040-NR, line 7. Then, ga to line 17 below. - Ir line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22. - Ir line 16 is zero, skip lines 17 through 21 below and enter - 0 - on Form 1040,10405R, or 1040NR, line 7. Then, go to line 22. 17 Are lines 15 and 16 both gains? - Yes. Go to line 18. [ No. Skip lines 18 through 21 , and go to line 22 . 18 If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet. 19 If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions). enter the arrount, if any, from line 18 of that worksheet. 20 Are lines 18 and 19 both zero or blank and are you not filing Form 4952 ? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forris 1040 and 10405R, line 16 . Don't complete lines 21 and 22 below. [ No. Complete the Schedule D Tax Worksheet in the instructioris. Don't camplete tines 21 aril 22 below. 21 If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7 , the smaller of: - The lass on line 16; ar - (53,000), or if married faling separately, (51,500) Notes When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualified dividends on Form 1040, 1040-5R, or 1040-NR, Fine 3a? Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 10405R, line 16. No. Cornplete the rest of Form 1040, 1040-SR, or 1040-NR. Schedule D (Form 1040) 2020 enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to ligure the amount of the adjustment. Form 8949(2020) F eacheck T Chack My work l ricatrtat. 2020 Tisx rate Schedulas Use the 2020 Tax Rate Schedules to cornpute 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.) In early 2021, the following take place: - Helen decides that she wants to live with one of ber daughters and moves to Arizona. - Asher graduates from dental school and joirs an existing practice in St. Louis. - Mia marries, and she and her spouse move in with his parents. - Using the insurance proceeds he received on Daniel's death, Logan pays off the mortgage on his personal residence. Logan beseves that these events may have an effect on his tax position for 2021. Therefore, he requests your advice. Complete the letter to Logan explaining in general terms the changes that will occur for tax purposes. Assume that Logaris salary and other factors not mentioned (e.g. property and state income taxes) will remain the same. The standard deduction for qualifying widower is $25,100, for head of household $18,800 and for single $12,550 in 2021. Use the 2021 tax rate schedules (click here) in projecting Logan's tax for 2021. - Your filing status moves from surviving spouse to . The result is a shift from the - The capital loss deduction is a x which is 4x less than last year. - For various reasons, no longer qualify as dependents. - Because of these changes you will benefit from Based on last year's data, an estimate of your Federal income tax liability for 2021 is . If I can be of further assistance to you in this matter, please do not hesitate to contact me Sirkerely, Eduardo Rodrique2