need help on the Form 8960 line 4b and line 12
Chapter 12 TRP 12-2
Assume the taxpayer does NOT wish to contribute to the Presidential Election Fund, unless otherwise stated in the problem.
Assume all taxpayers did NOT receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency during the year.
Dave (SSN 412-34-5670) and Alicia (SSN 412-34-5671) Stanley are married and file their return jointly. They have retired at the age of 51. The couples income consists of rental property, stock investments, and royalties from an invention. They sold their large house that they had purchased six years ago for $580,000 on October 18, 2020, for $1 million. They now live in a condo at 101 Magnolia Lane, Suite 15, Highland Park, FL 33853.
The rental property is an apartment complex (building cost $1.5 million and was purchased January 5, 2020) with 30 units that rent for $27,000 per month and are at 90% occupancy.
| Rental income | $ 291,600 |
| Salaries | 115,000 |
| Payroll taxes | 8,798 |
| Real estate taxes | 18,750 |
| Interest | 45,000 |
| Repairs and maintenance | 29,000 |
| Depreciation | (Calculate) |
The following information is also for the year:
| 1099-INT | Old Bank | $ 22,000 |
| 1099-DIV | Dell, Incorporated Ordinary dividends | 15,250 |
| | Qualified dividends | 15,250 |
| 1099-DIV | IBM, Incorporated Ordinary dividends | 8,650 |
| | Qualified dividends | 8,650 |
| 1099-DIV | Pepsi, Incorporated Ordinary dividends | 18,785 |
| | Qualified dividends | 18,785 |
| 1099-MISC | Box 2 royalties | 152,300 |
| | Purchased | Sold | Sale Price | Basis | Gain/Loss |
| Dell (held 9 month) | 12/01/19 | 09/01/20 | $ 15,000 | $ 9,000 | $ 6,000 |
| Pepsi (held 4 month) | 09/01/20 | 12/29/20 | 17,000 | 25,000 | (8,000) |
| IBM (held 30 month) | 06/05/18 | 12/05/20 | 38,000 | 20,000 | 18,000 |
On January 3, 2021, Dave repurchased the exact number of shares he sold on December 29, 2020. The Stanleys paid $12,000 each quarter (four payments) in federal estimated income taxes.
Prepare Form 1040 for the Stanleys. Taxpayers had qualifying health care coverage at all times during the tax year. You will also need Schedule 1, Schedule 2, Schedule B, Schedule D, Schedule E, Form 4562, Form 8949, and Form 8960. (List the names of the taxpayers in the order in which they appear in the problem. Input all the values as positive numbers. Round all intermediate computations and final answers to nearest whole dollar. Instructions can be found on certain cells within the forms. Do not skip rows while entering in Ordinary Dividends section on Part II of Schedule B and Residential rental property section on Section B of Form 4562. List the names of the properties in the order in which they appear in the problem.)
Use the appropriate Table 6A-6, Tax Tables or Tax Rate Schedules.
Form 8960. OMB No. 1545 2227 2020 Attachment Sequence No. 72 Your social security number or EIN 412-34-5670 22,000 42,685 2 3 Form 8960 Net Investment Income Tax- Individuals, Estates, and Trusts Department of the Treasury Attach to your tax return. Internal Revenue Service (99) Go to www.irs.gov/Form8960 for instructions and the latest information. Name(s) shown on your tax return Dave Stanley Alicia Stanley Part 1 Investment Income Section 6013(g) election (see instructions) Section 6013/h) election (see instructions) Regulations section 1.1411-10(9) election (see Instructions) 1 Taxable interest (see instructions) 2 Ordinary dividends (see instructions) 3 Annuities (see instructions) 4a Rental real estate, royalties, partnerships, S corporations, trusts, etc. (see instructions) 4a 175,077 b Adjustment for net income or loss derived in the ordinary course of a nonsection 1411 trade or business (see instructions) 4b c Combine lines 4a and 4b 5a Net gain or loss from disposition of property (see instructions) 5a 24,000 b Net gain or loss from disposition of property that is not subject to net investment income tax (see instructions) 5b c Adjustment from disposition of partnership interest or s corporation stock (see instructions) 5c d Combine lines 5a through 5c 6 Adjustments to investment income for certain CFCs and PFICs (see instructions) 7 Other modifications to investment income (see instructions) 8 Total investment income. Combine lines 1, 2, 3, 4, 5, 6, and 7 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a 40 175,077 24,000 5d 6 7 263,762 0 0 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a b State, local and foreign income tax (see instructions) 9b c Miscellaneous investment expenses (see instructions) 9c d Add lines 9a, 9b, and 90 9d 10 Additional modifications (see instructions) 10 11 Total deductions and modifications. Add lines 9d and 10 11 Part III Tax Computation 12 Net investment income. Subtract Part II. line 11, from Part I. line 8. Individuals, complete lines 13-17. Estates and trusts, complete lines 18a-21. If zero or less, enter-O- 12 Individuals: 13 Modified adjusted gross income (see instructions) 13 263,762 14 Threshold based on filing status (see instructions) 14 250,000 15 Subtract line 14 from line 13. If zero or less, enter-O- 15 13,762 16 Enter the smaller of line 12 or line 15 16 17 Net investment income tax for individuals. Multiply line 16 by 3.8% (0.038). Enter here and include on your tax return (see instructions) 17 Estates and Trusts: 18a Net investment income (line 12 above) 18a b Deductions for distributions of net investment income and deductions under section 64210) (see instructions) 18b c Undistributed net investment income. Subtract line 186 from 18a (see instructions). If zero or less, enter-O- 18C 19a Adjusted gross income (see instructions) 19a b Highest lax bracket for estates and trusts for the year (see instructions) 19b c Subtract line 19b from line 19a. If zero or less, enter-O- 19c 20 Enter the smaller of line 18c or line 190 20 21 Net investment income tax for estates and trusts. Multiply line 20 by 3.8% (0.038). Enter here and include on your tax return (see instructions) 21 For Paperwork Reduction Act Notice, see Form 1040 Instructions. Cat, No. 59474M THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. 13,762 523 Form 8960 (2020) Form 8960. OMB No. 1545 2227 2020 Attachment Sequence No. 72 Your social security number or EIN 412-34-5670 22,000 42,685 2 3 Form 8960 Net Investment Income Tax- Individuals, Estates, and Trusts Department of the Treasury Attach to your tax return. Internal Revenue Service (99) Go to www.irs.gov/Form8960 for instructions and the latest information. Name(s) shown on your tax return Dave Stanley Alicia Stanley Part 1 Investment Income Section 6013(g) election (see instructions) Section 6013/h) election (see instructions) Regulations section 1.1411-10(9) election (see Instructions) 1 Taxable interest (see instructions) 2 Ordinary dividends (see instructions) 3 Annuities (see instructions) 4a Rental real estate, royalties, partnerships, S corporations, trusts, etc. (see instructions) 4a 175,077 b Adjustment for net income or loss derived in the ordinary course of a nonsection 1411 trade or business (see instructions) 4b c Combine lines 4a and 4b 5a Net gain or loss from disposition of property (see instructions) 5a 24,000 b Net gain or loss from disposition of property that is not subject to net investment income tax (see instructions) 5b c Adjustment from disposition of partnership interest or s corporation stock (see instructions) 5c d Combine lines 5a through 5c 6 Adjustments to investment income for certain CFCs and PFICs (see instructions) 7 Other modifications to investment income (see instructions) 8 Total investment income. Combine lines 1, 2, 3, 4, 5, 6, and 7 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a 40 175,077 24,000 5d 6 7 263,762 0 0 Part II Investment Expenses Allocable to Investment Income and Modifications 9a Investment interest expenses (see instructions) 9a b State, local and foreign income tax (see instructions) 9b c Miscellaneous investment expenses (see instructions) 9c d Add lines 9a, 9b, and 90 9d 10 Additional modifications (see instructions) 10 11 Total deductions and modifications. Add lines 9d and 10 11 Part III Tax Computation 12 Net investment income. Subtract Part II. line 11, from Part I. line 8. Individuals, complete lines 13-17. Estates and trusts, complete lines 18a-21. If zero or less, enter-O- 12 Individuals: 13 Modified adjusted gross income (see instructions) 13 263,762 14 Threshold based on filing status (see instructions) 14 250,000 15 Subtract line 14 from line 13. If zero or less, enter-O- 15 13,762 16 Enter the smaller of line 12 or line 15 16 17 Net investment income tax for individuals. Multiply line 16 by 3.8% (0.038). Enter here and include on your tax return (see instructions) 17 Estates and Trusts: 18a Net investment income (line 12 above) 18a b Deductions for distributions of net investment income and deductions under section 64210) (see instructions) 18b c Undistributed net investment income. Subtract line 186 from 18a (see instructions). If zero or less, enter-O- 18C 19a Adjusted gross income (see instructions) 19a b Highest lax bracket for estates and trusts for the year (see instructions) 19b c Subtract line 19b from line 19a. If zero or less, enter-O- 19c 20 Enter the smaller of line 18c or line 190 20 21 Net investment income tax for estates and trusts. Multiply line 20 by 3.8% (0.038). Enter here and include on your tax return (see instructions) 21 For Paperwork Reduction Act Notice, see Form 1040 Instructions. Cat, No. 59474M THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. 13,762 523 Form 8960 (2020)
