Matthew B. (age 42) and Courtney S. (age 41) Mumford are married and live at 11426 W. Antelope Drive, Sioux Falls, SD 57107. Matthew is the manager for The Pour House, a popular bar and grill in Sioux Falls. Courtney is a self-employed architect. They are calendar year, cash basis taxpayers. 1.) Matthew's annual salary from The Pour House is $98,000. He also earns an annual bonus. The amount is determined in late December based on performance during the year and is paid in January of the following year. Matthew's 2018 bonus was $6,000 (received in 2019), and his 2019 bonus was $7,000 (received in 2020). Matthew participates in his employer's group health insurance plan to which he contributed $7,200 in 2019 for medical coverage. These contributions are made with after-tax dollars. The health plan covers Matthew, Courtney, and their two dependent children. The Pour House does not provide any retirement benefits, but it has established a $ 401(k) plan to enable its employees to save for retirement. Matthew contributed $19,000 to the plan in 2019. Matthew commutes to and from work 6 days a week (a roundtrip of 18 miles) in the family SUV. During 2019, Matthew drove the SUV a total of 12,700 miles. 2.)Courtney is a licensed architect who works part time as an architectural consultant. Her professional activity code is 541310. Her major clients are real estate developers (both residential and commercial) for whom she prepares structural designs and construction plans. She also advises on building code requirements regarding the renovation and remodeling of existing structures. Courtney does some of her work at client locations and the remainder in her office at home (see item 3 below). Courtney collected $72,000 in consulting fees during 2019. This total includes a $3,000 payment for work she performed in 2018 and does not include $5,000 she billed in December for work performed in late 2019. In addition, Courtney has a $6,400 unpaid invoice for work done in 2017. This client was convicted of arson in August 2016 and is now serving a 5-year sentence in a state prison. Courtney feels certain that she will never collect the $6,400 she is owed. Her business expenses for 2019 are as follows: Drafting supplies.............$4,800 Reproduction materials (e.g., molds, models, photos, blueprints, copies)... 3,200 On-site work clothing (e.g., hip boots, safety glasses, safety helmet..........860 Professional license fee.........400 Subscriptions to professional journals.... ..250 Dues to professional organizations..... In addition, Courtney drove the family Acura (purchased on June 7, 2018) 940 miles on her job assignments. She uses the standard mileage method to deduct business costs related to the Acura. During 2019, Courtney drove the car a total of 10,000 miles. 3.)When the Mumfords purchased their home on February 2, 2017, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Courtney's office. The Mumfords do not use the simplified method for computing the home office deduction. As of January 1, 2019, the home had an adjusted basis of $240,000 ($40,000 of which is attributable to the land) for purposes of line 37 of Form 8829. The fair market value of the property was $282,000. Relevant information concerning the residence for all of 2019 appears below: .240 Mar Ron Pro 3.)When the Mumfords purchased their home on February 2, 2017, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Courtney's office. The Mumfords do not use the simplified method for computing the home office deduction. As of January 1, 2019, the home had an adjusted basis of $240,000 ($40,000 of which is attributable to the land) for purposes of line 37 of Form 8829. The fair market value of the property was $282,000. Relevant information concerning the residence for all of 2019 appears below. Homeowner's insurance. ..$3,200 Repairs and maintenance.......1,800 Utilities...........6,200 Painting (office area only).........1,250 The cost of Courtney's office furniture and equipment was previously deducted under $179 in the years these assets were acquired. On June 29, 2019, she purchased a fireproof file cabinet for $800 to safeguard the blueprints of her structural designs and construction plans. Whenever possible, Courtney prefers to avoid depreciating capital expenditures over time. 4.)One of Courtney's clients was interested in building a shopping center on a tract of land she owned in Lincoln County. Courtney inherited the property from her uncle when he died on June 6, 1999. At that time, the land was valued at $40,000. It has since been rezoned for commercial use and has a current value of $200,000. On February 10,2019, Courtney exchanged the Lincoln parcel for a similar tract in Minnehaha County worth $190,000 and cash of $10,000. 5.)On September 2, 2019, Courtney sold a tract of land in McCook County to a farmer who owned the adjoining property. The land was inherited from the same uncle who died in 1999 and was valued at $30,000 on June 6, 1999. Under the terms of the sale, Courtney received cash of $20,000 and a note receivable to be paid in four equal installments at 1-year intervals from the date of sale. Each note calls for the payment of $25,000 plus simple interest of 8%. To the extent allowed by law, Courtney wants to defer recognition of gain for as long as possible. 6.)In early 2018, Matthew learned that one of the restaurant's best servers, Mindy Smith, was suffering domestic abuse at the hands of her husband Billy. When Billy started to abuse their 5-year-old daughter as well. Mindy decided it was time to leave. Before they left on April 14, 2018, Matthew loaned Mindy $5,500 to help her relocate with her daughter. Matthew had her sign an interest-free note due in 1 year Matthew never heard from Mindy again. In late 2019, Matthew learned that Billy tracked Mindy and their daughter down and killed both of them before committing suicide. Given these tragic circumstances, Matthew has no expectation that the loan will ever be repaid ManthamunahaanishaiMa AmmaaRMALamanna Menen 7.)On August 5, 2017, Matthew purchased 1,000 shares of Farmers Markets America (FMA) common stock for $16 a share as part of its initial public offering. The corporation was formed to establish and operate farmers' markets in mid-size cities throughout the United States. Although some market locations were profitable, the venture as a whole proved to be a failure. In November 2019, FMA's remaining assets were seized by its creditors, and FMA stock became worthless. B.) In addition to the items previously noted, the Mumfords had the following receipts for 2019: Interest income from: General Motors corporate bonds 1900 City of Sioux, SD bonds 1400 210 3510 Castle Bank Certificate of deposit Qualified dividends from MG&E Inc. Refund from Homestuff 3100 430 Loan repayment 4500 Cash gifts from courtney's parents 32000 2018 federal income tax refund 290 In December 2018, the Mumfords made a major purchase of household items (eg, appliances, furniture, etc.) at HomeStuff. They called the manager when they realized they did not receive the advertised sale price. Consequently, the store corrected the mistake and sent a $430 refund to the Mumfords in January 2019. Four years ago, Matthew lent his sister Sarah $4,000 to help pay for a honeymoon trip following her wedding to John Caine. Matthew was pleasantly surprised when Sarah paid him back (plus interest of $500) on December 20, 2019. On March 20 of each year, Courtney's parents send a generous gift of cash as a birthday present. Just as she has done for the past 7 years, Courtney immediately invested the cash in her children's $ 529 college savings plans. 9.)The Mumfords had the following expenditures for 2019: Cound contributions to headitionalURA $6000 9.)The Mumfords had the following expenditures for 2019: Courtney's contributions to her traditional IRA Net gamabling loss $6000 1000 Life insurance premiums 2700 Medical and dental expenses not covered by insurance 16612 Taxes: 4100 Ad valorem taxes on personal residence State and local sales taxes from receipts Interest on home mortgage reported on form 1098 2800 6900 4000 Cash contributions: Feeding south dakota (EIN 36-3293534) 1750 South dakota governor's election campaign fund 300 2050 The $1,000 net gambling loss for 2019 is the difference between the Mumfords' gambling winnings of $1,200 and losses of $2,200. The life insurance premiums relate to the universal life insurance policies that Matthew and Courtney own. The first beneficiary on both policies is the other spouse, with the second beneficiaries being the children. Included in the medical expenses are $1,200 incurred in 2018, which were paid in early February 2019. While South Dakota does not impose income taxes on individuals, it does impose sales taxes. The Mumfords can substantiate the $2,800 in sales taxes paid based on their purchase receipts for the year. The local sales tax rate in Sioux Falls is 2%. (Hint: Be sure to check to see if the Optional Sales Tax Tables provide the Mumfords with a greater deduction.) Courtney contributed to the governor's campaign fund because she thinks her influence was key in getting the Minnehaha County land rezoned for commercial use (see item 4 above). 10.)The Mumfords maintain a household that includes their two children, Nickolas (age 16) and Kaleigh (age 19). Nickolas is a junior in high school and a talented wrestler. In hopes of competing at the state tournament, all of his free time is consumed with weight training and wrestling practices. Kaleigh graduated from high school on June 7 2018, and is undecided about college. She is an accomplished vocalist and during 2019 earned $7,200 performing at various events (eg, weddings, funerals). Kaleigh placed most of her earnings in a savings account for future use and kept only a small amount to spend on herself. 11. Matthew's Form W-2 from The Pour House shows $15,800 withheld for Federal income tax. The Mumfords also made estimated tax payments to the IRS totaling $5,000 for 2019. 12. Relevant Social Security numbers are noted below. Name Social Security Number Matthew B. Mumford 123-45-6786 123-45-6787 Courtney S. Mumford Kaleigh J. Mumford 123-45-6788 Nickolas W. Mumford 123-45-6798 Requirements Prepare an income tax return (with all appropriate forms and schedules) for the Mumfords for 2019, using the following guidelines: The Mumfords choose to file a joint income tax return The Mumfords do not wish to contribute to the Presidential Election Campaign Fund. The Mumfords do not own any foreign bank accounts or other investments. In addition, the Mumfords do not have any financial interests in virtual currencies. The Mumfords prefer to receive a refund of any overpaid taxes. The taxpayers are preparing their own return (.e, no preparer is involved). For the past several years, the Mumfords have itemized their deductions from AGL The taxpayers have the necessary substantiation (eg, records, receipts) to support all transactions reported on their tax return. Make necessary assumptions for information not given in the problem but needed to complete the return. 31040 Department of the Traurymma tevenue Device U.S. Individual Income Tax Return 2019 ON No. 1545-0074 IS Use Only Do not who intro Filing Status Single Married filing jointly Marred filing separately (MFS) Head of household HOW Quiltying widowe (w) Check only # you checked the MFs box, enter the name of spouse. If you checked the HOH Orow box, enter the child's name the qualityra person is a child but not your dependent Your first name and middle initial Your social security number ore box Last name I joint return, spouse's first name and middle intial Last name Spouse's social security number Home address number and street). If you have a PO box, se instructions Apt.no Presidential Clection Campaign Check here you or your spouse iffing pinty, want $3 to go to this tund City, town or post office, stato, and ZIP code. If you have a foreign address, also completo spaces below (no instructions), Checking a box below will not change you tax refund You Spouse Foreign country name Foreign province/state/county Foreign postal code more than four dependents see instructions and here Standard Someone con claim You an a dependent Your spouse as a dependent Deduction Spouse items on a separate return or you were a dual-status alien Age/Blindness You Were born before January 2, 1955 Are bind Spouse: Was bombefore January 2, 1955 sind Dependents (se instructions (2) Social security number Relationship to you 14 life for fremtruction (1) Fiestane Laste Child tax credit Creat for other dependents 1 2b 3b 4b 40 8 Ta 1 Wages, claro, tipo eto Attach For W-2 2a Tacxemot interest b Taxable interest. Altach Sch. Bit required 30 Qualified dividende 3a Standard b Ordinary dividends. Attach Sch. Biroured Deduction for 4a IHA distributions Taxable amount Bingor Married 40 Tingsparty Pensions and annuities d Taxable amount $12,200 te olal security benefits sa b Taxable amount Manding you . Cap gun oro). Attach tichedule Dif required not requred, check here widow Ta 24,400 Other income from Schedule tine 01 b Addines 1, 2, 3, 4, 4, 5, 6 and 7. This is your total income ho $15.300 ba Adjustments to income from Schedule 1. in 22 you chached Suorine la troine 70. This is your adjusted gross income arty box unde 0 Standard deduction or temized deductions from theddle ) o Det 10 Qualfed business income deduction, tech Form 1995 or Form 0906 A 10 Ita Add Ines 10 Taxable income. Sur na 1a from inte bifrero or no For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, separate instructions 130 7b ob 110 Form 1040 2010) 12a o 20 Form 1040 (2019) Page 2 12a Tax (soe Inst.) Check it any from Form(s): 1 8814 2 4972 30 b Add Schedule 2. Ine 3, and line 120 and enter the total 12b 13a Child tax credit or credit for other dependents 13a b Add Schedule 3, Ine 7, and ine 13a and enter the total 13b 14 Subtract line 136 from Ino 12b. If zero or less, onter - - 14 15 Other taxes, including self-employment tox, from Schedule 2, line 10 15 16 Add line 14 and 15. This is your totaltex 16 17 Federal income tax withheld from Forms W-2 and 1090 17 18 you have a Other payments and refundable credits: quallyng tid Eamed Income credit (EC) 18a attach Sch. EIC b Additional child tax credit. Attach Schedule 8812 186 you have vonate American opportunity credit from Form 1863, line 8 18c combat pay, instructions d Schedule 3. ine 14 18d Add lines 18 through 18d. These are your total other payments and refundablo credits 180 19 Add Ines 17 and 180. There are your total payments 19 20 Refund Mine 19 is more than line 16, subtract line 18 from ine 19. This is the amount you overpuld 210 Amount of no 20 you want refunded to you. If Form Boeslu attached, check here 21a Drect depot b Routing number Type Checking Saving Serructora d Account number 22 Amount of in 20 you want applied to your 2020 estimated tax 22 Amount 23 Amount you owe. Subtractine 19 from ine 16. For details on how to pay, se instructions 23 You Owe 24 Estimated tax penalty (see Instructions 24 Third Party Do you want to allow another person other than your paid preparer) to discuss the retum with the RS7 Soo nutructions Yes. Complete below. Designee Other than De groo's Prote Personal identification precare no number (PIN) Sign Unders of perfury, deliver have samired this return and concanings and want, and to the best of my owledge and let they we Donect, and complete. Daration of other buted on a notion of which are and Your signature Date Your occupation the IRS sont you an identity otection PIN, enter it here Joint rotur? rest) See Instructions Spouse's signature. If a joint retum, both must on Date Spouse's occupation if their sont your spouse an Keep a copy for Identity Protection PIN,anter it here your records beeinet) Phone no Emaladie Preparer's name Preparera signature Date PTIN Paid Checki Preparer 3rd Pwty Design Use Only Firm's name Phone na Self employed Fim's adore Firm's EN Go to www.irs.govi Form1040 for instructions and the latest information Form 1040 No Here OMB No 1545-0074 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040 or 1040-SR) Department of the Treasury Attach to Form 1040 or 1040-SR. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name() shown on Form 1040 or 1000-SA 2019 Attachment Sequence No. 01 Your social security number At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Part 1 Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes. 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or (los). Attach Schedule C 3 4 Other gains or losses). Attach Form 4797 4 5 Rental real estate, royalties, partnerships, Scorporations, trusts, etc. Attach Schedule E. 5 6 Farm income or (loss). Attach Schedule F 6 7 Unemployment compensation 7 8 Other Income. List type and amount 8 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 78 9 Part II Adjustments to Income 10 Educator expenses 10 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a Alimony paid 188 b Recipient's SSN G Date of original divorce or separation agreement (see instructions) 19 IRA deduction 20 Student loan interest deduction 19 21 Tuition and foes. Attach Form 8917 20 22 Add lines 10 through 21. These are your adjustments to Income. Enter here and on Form 1040 21 1040-SR, ne Ba For Paperwork Reduction Act Notice, see your tax return instructions 22 Cat No 714701 Schedule 1 Form 1040 of 1040-SR) 2019 OMB No. 1545-0074 SCHEDULE 2 Additional Taxes (Form 1040 or 1040-SR) Department of the Treasury Attach to Form 1040 or 1040-SR. Intemal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 or 1040-SA 2019 Attachment Sequence No. 02 Your social security number 3 Part 1 Tax 1 Alternative minimum tax. Attach Form 6251 1 2 Excess advance premium tax credit repayment. Attach Form 8962 2 3 Add lines 1 and 2. Enter here and include on Form 1040 or 1040-SR, line 12b Part II Other Taxes 4 Self-employment tax. Attach Schedule SE 4 5 Unreported social security and Medicare tax from Form: a 4137 b8919 5 6 Additional tax on IRAs, other qualified retirement plans, and other tax-favored accounts. Attach Form 5329 if required 6 7a Household employment taxes. Attach Schedule H 7a b Repayment of first-time homebuyer credit from Form 5405. Attach Form 5405 if required 7b Taxes from: a Form 8959 b Form 8960 c Instructions, enter code(s) 9 Section 965 net tax liability installment from Form 965-A 9 10 Add lines 4 through 8. These are your total other taxes. Enter here and on Form 1040 or 1040-SR. line 15 10 For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 2 (Form 1010 or 1040-SR) 2010 8 8 Cat No. 714760 OMB No. 1545-0074 SCHEDULE 3 (Form 1040 or 1040-SR) Department of the Treasury Intemal Revenue Service Name(s) shown on Form 1040 or 1040-SA Additional Credits and Payments Attach to Form 1040 or 1040-SR. Go to www.irs.gov/Form 1040 for instructions and the latest information 2019 Attachment Sequence No. 03 Your social security number 1 2 3 4 5 6 7 Part I Nonrefundable Credits 1 Foreign tax credit. Attach Form 1116 if required 2 Credit for child and dependent care expenses. Attach Form 2441 3 Education credits from Form 8863, line 19 4 Retirement savings contributions credit. Attach Form 8880 5 Residential energy credits. Attach Form 5695 6 Other credits from Form: a 3800 b8801 7 Add lines 1 through 6. Enter here and include on Form 1040 or 1040-SR, line 13 Part II Other Payments and Refundable Credits 8 2019 estimated tax payments and amount applied from 2018 return 9 Net premium tax credit. Attach Form 8962. 10 Amount paid with request for extension to file (see instructions) 11 Excess social security and tier 1 RRTA tax withheld 12 Credit for federal tax on fuels. Attach Form 4136 13 Credits from Form: a 2439 b Reserved C 8885 da 14 Add lines 8 through 13. Enter here and on Form 1040 or 1040-SR, line 18d For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 71450G 8 9 10 11 12 13 14 Schedule 3 (Form 1040 or 1040-SR) 2019 Matthew B. (age 42) and Courtney S. (age 41) Mumford are married and live at 11426 W. Antelope Drive, Sioux Falls, SD 57107. Matthew is the manager for The Pour House, a popular bar and grill in Sioux Falls. Courtney is a self-employed architect. They are calendar year, cash basis taxpayers. 1.) Matthew's annual salary from The Pour House is $98,000. He also earns an annual bonus. The amount is determined in late December based on performance during the year and is paid in January of the following year. Matthew's 2018 bonus was $6,000 (received in 2019), and his 2019 bonus was $7,000 (received in 2020). Matthew participates in his employer's group health insurance plan to which he contributed $7,200 in 2019 for medical coverage. These contributions are made with after-tax dollars. The health plan covers Matthew, Courtney, and their two dependent children. The Pour House does not provide any retirement benefits, but it has established a $ 401(k) plan to enable its employees to save for retirement. Matthew contributed $19,000 to the plan in 2019. Matthew commutes to and from work 6 days a week (a roundtrip of 18 miles) in the family SUV. During 2019, Matthew drove the SUV a total of 12,700 miles. 2.)Courtney is a licensed architect who works part time as an architectural consultant. Her professional activity code is 541310. Her major clients are real estate developers (both residential and commercial) for whom she prepares structural designs and construction plans. She also advises on building code requirements regarding the renovation and remodeling of existing structures. Courtney does some of her work at client locations and the remainder in her office at home (see item 3 below). Courtney collected $72,000 in consulting fees during 2019. This total includes a $3,000 payment for work she performed in 2018 and does not include $5,000 she billed in December for work performed in late 2019. In addition, Courtney has a $6,400 unpaid invoice for work done in 2017. This client was convicted of arson in August 2016 and is now serving a 5-year sentence in a state prison. Courtney feels certain that she will never collect the $6,400 she is owed. Her business expenses for 2019 are as follows: Drafting supplies.............$4,800 Reproduction materials (e.g., molds, models, photos, blueprints, copies)... 3,200 On-site work clothing (e.g., hip boots, safety glasses, safety helmet..........860 Professional license fee.........400 Subscriptions to professional journals.... ..250 Dues to professional organizations..... In addition, Courtney drove the family Acura (purchased on June 7, 2018) 940 miles on her job assignments. She uses the standard mileage method to deduct business costs related to the Acura. During 2019, Courtney drove the car a total of 10,000 miles. 3.)When the Mumfords purchased their home on February 2, 2017, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Courtney's office. The Mumfords do not use the simplified method for computing the home office deduction. As of January 1, 2019, the home had an adjusted basis of $240,000 ($40,000 of which is attributable to the land) for purposes of line 37 of Form 8829. The fair market value of the property was $282,000. Relevant information concerning the residence for all of 2019 appears below: .240 Mar Ron Pro 3.)When the Mumfords purchased their home on February 2, 2017, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Courtney's office. The Mumfords do not use the simplified method for computing the home office deduction. As of January 1, 2019, the home had an adjusted basis of $240,000 ($40,000 of which is attributable to the land) for purposes of line 37 of Form 8829. The fair market value of the property was $282,000. Relevant information concerning the residence for all of 2019 appears below. Homeowner's insurance. ..$3,200 Repairs and maintenance.......1,800 Utilities...........6,200 Painting (office area only).........1,250 The cost of Courtney's office furniture and equipment was previously deducted under $179 in the years these assets were acquired. On June 29, 2019, she purchased a fireproof file cabinet for $800 to safeguard the blueprints of her structural designs and construction plans. Whenever possible, Courtney prefers to avoid depreciating capital expenditures over time. 4.)One of Courtney's clients was interested in building a shopping center on a tract of land she owned in Lincoln County. Courtney inherited the property from her uncle when he died on June 6, 1999. At that time, the land was valued at $40,000. It has since been rezoned for commercial use and has a current value of $200,000. On February 10,2019, Courtney exchanged the Lincoln parcel for a similar tract in Minnehaha County worth $190,000 and cash of $10,000. 5.)On September 2, 2019, Courtney sold a tract of land in McCook County to a farmer who owned the adjoining property. The land was inherited from the same uncle who died in 1999 and was valued at $30,000 on June 6, 1999. Under the terms of the sale, Courtney received cash of $20,000 and a note receivable to be paid in four equal installments at 1-year intervals from the date of sale. Each note calls for the payment of $25,000 plus simple interest of 8%. To the extent allowed by law, Courtney wants to defer recognition of gain for as long as possible. 6.)In early 2018, Matthew learned that one of the restaurant's best servers, Mindy Smith, was suffering domestic abuse at the hands of her husband Billy. When Billy started to abuse their 5-year-old daughter as well. Mindy decided it was time to leave. Before they left on April 14, 2018, Matthew loaned Mindy $5,500 to help her relocate with her daughter. Matthew had her sign an interest-free note due in 1 year Matthew never heard from Mindy again. In late 2019, Matthew learned that Billy tracked Mindy and their daughter down and killed both of them before committing suicide. Given these tragic circumstances, Matthew has no expectation that the loan will ever be repaid ManthamunahaanishaiMa AmmaaRMALamanna Menen 7.)On August 5, 2017, Matthew purchased 1,000 shares of Farmers Markets America (FMA) common stock for $16 a share as part of its initial public offering. The corporation was formed to establish and operate farmers' markets in mid-size cities throughout the United States. Although some market locations were profitable, the venture as a whole proved to be a failure. In November 2019, FMA's remaining assets were seized by its creditors, and FMA stock became worthless. B.) In addition to the items previously noted, the Mumfords had the following receipts for 2019: Interest income from: General Motors corporate bonds 1900 City of Sioux, SD bonds 1400 210 3510 Castle Bank Certificate of deposit Qualified dividends from MG&E Inc. Refund from Homestuff 3100 430 Loan repayment 4500 Cash gifts from courtney's parents 32000 2018 federal income tax refund 290 In December 2018, the Mumfords made a major purchase of household items (eg, appliances, furniture, etc.) at HomeStuff. They called the manager when they realized they did not receive the advertised sale price. Consequently, the store corrected the mistake and sent a $430 refund to the Mumfords in January 2019. Four years ago, Matthew lent his sister Sarah $4,000 to help pay for a honeymoon trip following her wedding to John Caine. Matthew was pleasantly surprised when Sarah paid him back (plus interest of $500) on December 20, 2019. On March 20 of each year, Courtney's parents send a generous gift of cash as a birthday present. Just as she has done for the past 7 years, Courtney immediately invested the cash in her children's $ 529 college savings plans. 9.)The Mumfords had the following expenditures for 2019: Cound contributions to headitionalURA $6000 9.)The Mumfords had the following expenditures for 2019: Courtney's contributions to her traditional IRA Net gamabling loss $6000 1000 Life insurance premiums 2700 Medical and dental expenses not covered by insurance 16612 Taxes: 4100 Ad valorem taxes on personal residence State and local sales taxes from receipts Interest on home mortgage reported on form 1098 2800 6900 4000 Cash contributions: Feeding south dakota (EIN 36-3293534) 1750 South dakota governor's election campaign fund 300 2050 The $1,000 net gambling loss for 2019 is the difference between the Mumfords' gambling winnings of $1,200 and losses of $2,200. The life insurance premiums relate to the universal life insurance policies that Matthew and Courtney own. The first beneficiary on both policies is the other spouse, with the second beneficiaries being the children. Included in the medical expenses are $1,200 incurred in 2018, which were paid in early February 2019. While South Dakota does not impose income taxes on individuals, it does impose sales taxes. The Mumfords can substantiate the $2,800 in sales taxes paid based on their purchase receipts for the year. The local sales tax rate in Sioux Falls is 2%. (Hint: Be sure to check to see if the Optional Sales Tax Tables provide the Mumfords with a greater deduction.) Courtney contributed to the governor's campaign fund because she thinks her influence was key in getting the Minnehaha County land rezoned for commercial use (see item 4 above). 10.)The Mumfords maintain a household that includes their two children, Nickolas (age 16) and Kaleigh (age 19). Nickolas is a junior in high school and a talented wrestler. In hopes of competing at the state tournament, all of his free time is consumed with weight training and wrestling practices. Kaleigh graduated from high school on June 7 2018, and is undecided about college. She is an accomplished vocalist and during 2019 earned $7,200 performing at various events (eg, weddings, funerals). Kaleigh placed most of her earnings in a savings account for future use and kept only a small amount to spend on herself. 11. Matthew's Form W-2 from The Pour House shows $15,800 withheld for Federal income tax. The Mumfords also made estimated tax payments to the IRS totaling $5,000 for 2019. 12. Relevant Social Security numbers are noted below. Name Social Security Number Matthew B. Mumford 123-45-6786 123-45-6787 Courtney S. Mumford Kaleigh J. Mumford 123-45-6788 Nickolas W. Mumford 123-45-6798 Requirements Prepare an income tax return (with all appropriate forms and schedules) for the Mumfords for 2019, using the following guidelines: The Mumfords choose to file a joint income tax return The Mumfords do not wish to contribute to the Presidential Election Campaign Fund. The Mumfords do not own any foreign bank accounts or other investments. In addition, the Mumfords do not have any financial interests in virtual currencies. The Mumfords prefer to receive a refund of any overpaid taxes. The taxpayers are preparing their own return (.e, no preparer is involved). For the past several years, the Mumfords have itemized their deductions from AGL The taxpayers have the necessary substantiation (eg, records, receipts) to support all transactions reported on their tax return. Make necessary assumptions for information not given in the problem but needed to complete the return. 31040 Department of the Traurymma tevenue Device U.S. Individual Income Tax Return 2019 ON No. 1545-0074 IS Use Only Do not who intro Filing Status Single Married filing jointly Marred filing separately (MFS) Head of household HOW Quiltying widowe (w) Check only # you checked the MFs box, enter the name of spouse. If you checked the HOH Orow box, enter the child's name the qualityra person is a child but not your dependent Your first name and middle initial Your social security number ore box Last name I joint return, spouse's first name and middle intial Last name Spouse's social security number Home address number and street). If you have a PO box, se instructions Apt.no Presidential Clection Campaign Check here you or your spouse iffing pinty, want $3 to go to this tund City, town or post office, stato, and ZIP code. If you have a foreign address, also completo spaces below (no instructions), Checking a box below will not change you tax refund You Spouse Foreign country name Foreign province/state/county Foreign postal code more than four dependents see instructions and here Standard Someone con claim You an a dependent Your spouse as a dependent Deduction Spouse items on a separate return or you were a dual-status alien Age/Blindness You Were born before January 2, 1955 Are bind Spouse: Was bombefore January 2, 1955 sind Dependents (se instructions (2) Social security number Relationship to you 14 life for fremtruction (1) Fiestane Laste Child tax credit Creat for other dependents 1 2b 3b 4b 40 8 Ta 1 Wages, claro, tipo eto Attach For W-2 2a Tacxemot interest b Taxable interest. Altach Sch. Bit required 30 Qualified dividende 3a Standard b Ordinary dividends. Attach Sch. Biroured Deduction for 4a IHA distributions Taxable amount Bingor Married 40 Tingsparty Pensions and annuities d Taxable amount $12,200 te olal security benefits sa b Taxable amount Manding you . Cap gun oro). Attach tichedule Dif required not requred, check here widow Ta 24,400 Other income from Schedule tine 01 b Addines 1, 2, 3, 4, 4, 5, 6 and 7. This is your total income ho $15.300 ba Adjustments to income from Schedule 1. in 22 you chached Suorine la troine 70. This is your adjusted gross income arty box unde 0 Standard deduction or temized deductions from theddle ) o Det 10 Qualfed business income deduction, tech Form 1995 or Form 0906 A 10 Ita Add Ines 10 Taxable income. Sur na 1a from inte bifrero or no For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, separate instructions 130 7b ob 110 Form 1040 2010) 12a o 20 Form 1040 (2019) Page 2 12a Tax (soe Inst.) Check it any from Form(s): 1 8814 2 4972 30 b Add Schedule 2. Ine 3, and line 120 and enter the total 12b 13a Child tax credit or credit for other dependents 13a b Add Schedule 3, Ine 7, and ine 13a and enter the total 13b 14 Subtract line 136 from Ino 12b. If zero or less, onter - - 14 15 Other taxes, including self-employment tox, from Schedule 2, line 10 15 16 Add line 14 and 15. This is your totaltex 16 17 Federal income tax withheld from Forms W-2 and 1090 17 18 you have a Other payments and refundable credits: quallyng tid Eamed Income credit (EC) 18a attach Sch. EIC b Additional child tax credit. Attach Schedule 8812 186 you have vonate American opportunity credit from Form 1863, line 8 18c combat pay, instructions d Schedule 3. ine 14 18d Add lines 18 through 18d. These are your total other payments and refundablo credits 180 19 Add Ines 17 and 180. There are your total payments 19 20 Refund Mine 19 is more than line 16, subtract line 18 from ine 19. This is the amount you overpuld 210 Amount of no 20 you want refunded to you. If Form Boeslu attached, check here 21a Drect depot b Routing number Type Checking Saving Serructora d Account number 22 Amount of in 20 you want applied to your 2020 estimated tax 22 Amount 23 Amount you owe. Subtractine 19 from ine 16. For details on how to pay, se instructions 23 You Owe 24 Estimated tax penalty (see Instructions 24 Third Party Do you want to allow another person other than your paid preparer) to discuss the retum with the RS7 Soo nutructions Yes. Complete below. Designee Other than De groo's Prote Personal identification precare no number (PIN) Sign Unders of perfury, deliver have samired this return and concanings and want, and to the best of my owledge and let they we Donect, and complete. Daration of other buted on a notion of which are and Your signature Date Your occupation the IRS sont you an identity otection PIN, enter it here Joint rotur? rest) See Instructions Spouse's signature. If a joint retum, both must on Date Spouse's occupation if their sont your spouse an Keep a copy for Identity Protection PIN,anter it here your records beeinet) Phone no Emaladie Preparer's name Preparera signature Date PTIN Paid Checki Preparer 3rd Pwty Design Use Only Firm's name Phone na Self employed Fim's adore Firm's EN Go to www.irs.govi Form1040 for instructions and the latest information Form 1040 No Here OMB No 1545-0074 SCHEDULE 1 Additional Income and Adjustments to Income (Form 1040 or 1040-SR) Department of the Treasury Attach to Form 1040 or 1040-SR. Internal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name() shown on Form 1040 or 1000-SA 2019 Attachment Sequence No. 01 Your social security number At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes No Part 1 Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes. 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or (los). Attach Schedule C 3 4 Other gains or losses). Attach Form 4797 4 5 Rental real estate, royalties, partnerships, Scorporations, trusts, etc. Attach Schedule E. 5 6 Farm income or (loss). Attach Schedule F 6 7 Unemployment compensation 7 8 Other Income. List type and amount 8 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 78 9 Part II Adjustments to Income 10 Educator expenses 10 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a Alimony paid 188 b Recipient's SSN G Date of original divorce or separation agreement (see instructions) 19 IRA deduction 20 Student loan interest deduction 19 21 Tuition and foes. Attach Form 8917 20 22 Add lines 10 through 21. These are your adjustments to Income. Enter here and on Form 1040 21 1040-SR, ne Ba For Paperwork Reduction Act Notice, see your tax return instructions 22 Cat No 714701 Schedule 1 Form 1040 of 1040-SR) 2019 OMB No. 1545-0074 SCHEDULE 2 Additional Taxes (Form 1040 or 1040-SR) Department of the Treasury Attach to Form 1040 or 1040-SR. Intemal Revenue Service Go to www.irs.gov/Form 1040 for instructions and the latest information. Name(s) shown on Form 1040 or 1040-SA 2019 Attachment Sequence No. 02 Your social security number 3 Part 1 Tax 1 Alternative minimum tax. Attach Form 6251 1 2 Excess advance premium tax credit repayment. Attach Form 8962 2 3 Add lines 1 and 2. Enter here and include on Form 1040 or 1040-SR, line 12b Part II Other Taxes 4 Self-employment tax. Attach Schedule SE 4 5 Unreported social security and Medicare tax from Form: a 4137 b8919 5 6 Additional tax on IRAs, other qualified retirement plans, and other tax-favored accounts. Attach Form 5329 if required 6 7a Household employment taxes. Attach Schedule H 7a b Repayment of first-time homebuyer credit from Form 5405. Attach Form 5405 if required 7b Taxes from: a Form 8959 b Form 8960 c Instructions, enter code(s) 9 Section 965 net tax liability installment from Form 965-A 9 10 Add lines 4 through 8. These are your total other taxes. Enter here and on Form 1040 or 1040-SR. line 15 10 For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 2 (Form 1010 or 1040-SR) 2010 8 8 Cat No. 714760 OMB No. 1545-0074 SCHEDULE 3 (Form 1040 or 1040-SR) Department of the Treasury Intemal Revenue Service Name(s) shown on Form 1040 or 1040-SA Additional Credits and Payments Attach to Form 1040 or 1040-SR. Go to www.irs.gov/Form 1040 for instructions and the latest information 2019 Attachment Sequence No. 03 Your social security number 1 2 3 4 5 6 7 Part I Nonrefundable Credits 1 Foreign tax credit. Attach Form 1116 if required 2 Credit for child and dependent care expenses. Attach Form 2441 3 Education credits from Form 8863, line 19 4 Retirement savings contributions credit. Attach Form 8880 5 Residential energy credits. Attach Form 5695 6 Other credits from Form: a 3800 b8801 7 Add lines 1 through 6. Enter here and include on Form 1040 or 1040-SR, line 13 Part II Other Payments and Refundable Credits 8 2019 estimated tax payments and amount applied from 2018 return 9 Net premium tax credit. Attach Form 8962. 10 Amount paid with request for extension to file (see instructions) 11 Excess social security and tier 1 RRTA tax withheld 12 Credit for federal tax on fuels. Attach Form 4136 13 Credits from Form: a 2439 b Reserved C 8885 da 14 Add lines 8 through 13. Enter here and on Form 1040 or 1040-SR, line 18d For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 71450G 8 9 10 11 12 13 14 Schedule 3 (Form 1040 or 1040-SR) 2019