Note: This problem is for the 2018 tax year. Alfred E. Old and Beulah A. Crane, each age 42, married on September 7, 2016. Alfred and Beulah will file a joint return for 2018. Alfred's Social Security number is 111-11-1109. Beulah's Social Security number is 123-45-6780, and she adopted "Old" as her married name. They live at 211 Brickstone Drive, Atlanta, GA 30304. Alfred was divorced from Sarah Old in March 2016. Under the divorce agreement, Alfred is to pay Sarah $1,250 per month for the next 10 years or until Sarah's death, whichever occurs first. Alfred pays Sarah $15,000 in 2018. In addition, in January 2018, Alfred pays Sarah $50,000, which is designated as being for her share of the marital property. Also, Alfred is responsible for all prior years' income taxes. Sarah's Social Security number is 123-45-6788. Alfred's salary for 2018 is $150,000. He is an executive working for Cherry, Inc. (Federal I.D. No. 98-7654321). As part of his compensation package, Cherry provides him with group term life insurance equal to twice his annual salary. His employer withheld $24,900 for Federal income taxes and $8,000 for state income taxes. The proper amounts were withheld for FICA taxes. Beulah recently graduated from law school and is employed by Legal Aid Society, Inc. (Federal I.D. No. 11-1111111), as a public defender. She receives a salary of $42,000 in 2018. Her employer withheld $7,500 for Federal income taxes and $2,400 for state income taxes. The proper amounts were withheld for FICA taxes. Alfred and Beulah had interest income of $500. Alfred and Beulah receive a $1,900 refund on their 2017 state income taxes. They itemized deductions on their 2017 Federal income tax return (total of $15,000). Alfred and Beulah pay $4,500 interest and $1,450 property taxes on their personal residence in 2018. Their charitable contributions total $2,400 (all to their church). They paid sales taxes of $1,400, for which they maintain the receipts. Both spouses had health insurance for all months of 2018 and do not want to contribute to the Presidential Election Campaign. Required: Compute the Olds' net tax payable (or refund due) for 2018. Use Form 1040 and Schedule 1 to complete this tax return. . It may be necessary to complete the tax schedule and worksheet before completing Form 1040. Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "o". Make realistic assumptions about any missing data. When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. Use the 2018 Tax Rate Schedule provided. Do not use the Tax Tables. of the amount over- $ 0 13,600 51,800 82,500 157,500 200,000 500,000 2018 Tax Rate Schedules Single-Schedule X Head of household-Schedule Z If taxable of the If taxable income is: But not amount income is: But not Over- over- The tax is: over- Over- over- The tax is: $ 0 $ 9,525 ......... 10% $ 0 S 0 $ 13,600 ......... 10% 9,525 38,700 $ 952.50 + 12% 9,525 13,600 51,800 $ 1,360.00 + 12% 38,700 82,500 4,453.50 + 22% 38,700 51,800 82,500 5,944.00 + 22% 82,500 157,500 14,089.50 + 24% 82,500 82,500 157,500 12,698.00 + 24% 157,500 200,000 32,089.50 + 32% 157,500 157,500 200,000 30,698.00 + 32% 200,000 500,000 45,689.50 + 35% 200,000 200,000 500,000 44,298.00 + 35% 500,000 150,689.50 + 37% 500,000 500,000 149,298.00 + 37% Married filing jointly or Qualifying widow(er)- Married filing separatelySchedule Y-2 Schedule Y-1 If taxable of the If taxable income is: But not amount income is: But not Over- over- The tax is: over- over- The tax is: $ 0 $ 19,050 ......... 10% $ 0 S 0 $ 9,525 19,050 77,400 $ 1,905.00 + 12% 19,050 9,525 38,700 $ 952.50 + 12% 77,400 165,000 8,907.00 + 22% 77,400 38,700 82,500 4,453.50 + 22% 165,000 315,000 28, 179.00 + 24% 165,000 82,500 157,500 14,089.50 + 24% 315,000 400,000 64,179.00 + 32% 315,000 157,500 200,000 32,089.50 + 32% 400,000 600,000 91,379.00 + 35% 400,000 200,000 300,000 45,689.50 + 35% 600,000 161,379.00 + 37% 600,000 300,000 80,689.50 + 37% of the amount over- Over- ......... 10% $ 0 9,525 38,700 82,500 157,500 200,000 300,000 EXHIBIT 4.3 Uniform Premiums for $1,000 of Group Term Life Insurance Protection Attained Age on Last Day of Employee's Tax Year Under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70 and above Cost per $1,000 of Protection for One-Month Period* $ 0.05 0.06 0.08 0.09 0.10 0.15 0.23 0.43 0.66 1.27 2.06 *Reg. $ 1.79-3, effective for coverage after June 30, 1999. Complete Form 1040 for the Olds. Form Department of the Treasury-Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2018 OMB No. 1545-0074 IRS Use Only Filing status: Married filing jointly Last name Your first name and initial Alfred E. old Your social security number 111-11-1109 Your standard deduction: None Last name If joint return, spouse's first name and initial Beulah A. Old Spouse's social security number 123-45-6780 Spouse standard deduction: o Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 Spouse is blind O Spouse itemizes on a separate return or you were dual- status alien Yes Full-year health care coverage or exempt (see inst.) Apt. no. Home address (number and street). If you have a P.O. box, see instructions. 211 Brickstone Drive Presidential Election Campaign (see inst.) None City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6. Atlanta, GA 30304 If more than four dependents, see inst. and here o Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualifies for (see inst.): (1) First name Last name Child tax credit Credit for other dependents Sign Here Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Executive If the IRS sent you an Identity Protection PIN, enter it here Joint return? See (see inst.) instructions. Keep a copy for your records. Spouse's signature. If a joint Date return, both must sign. Spouse's occupation Lawyer If the IRS sent you an Identity Protection PIN, enter it here (see inst.) Preparer's name PTIN Paid Firm's EIN Check if: Preparer's signature Self-Prepared 3rd Party Designee Self-employed Firm's name Preparer Use Only Phone no. Firm's address BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2018) Form 1040 (2018) Alfred E. and Beulah A. Old 111-11-1109 Page 2 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 192,000 2a Tax-exempt interest 2a b Taxable interest 2b 500 3a Qualified dividends 3a b Ordinary dividends 3b 4a IRAs, pensions, and annuities 4a b Taxable amount Attach Form(s) W- 2. Also attach Form(s) W-2G and 1099-R if tax was withheld. 4b 5a Social security benefits 5a b Taxable amount 5b 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 6 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6.. 7 Standard 8 Standard deduction or itemized deductions (from Schedule A).. 8 Standard deduction or itemized deductions (from Schedule A) 8 Qualified business income deduction (see instructions) 9 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter-0- 10 1 Form(s) 8814 a Tax (see inst) (check if any from: 20 Form 4972 30 b Add any amount from Schedule 2 and check here 11 Standard 8 Deduction for- 9 Single or married filing separately, 10 $12,000 11 Married filing jointly or Qualifying widow(er), $24,000 Head of 12 household, $18,000 13 If you checked any box under 14 Standard 15 deduction, see instructions. 16 a Child tax credit/credit for other dependents b Add any amount from Schedule 3 and check here 12 Subtract line 12 from line 11. If zero or less, enter -0- 13 Other taxes. Attach Schedule 4. 14 Total tax. Add lines 13 and 14. 15 Federal income tax withheld from Forms W-2 and 1099 16 17 Refundable credits: a EIC (see inst.). b Sch 8812 c Form 8863 Add any amount from Schedule 5 17 18 Add lines 16 and 17. These are your total payments 18 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 19 20a Direct deposit? b Routing number x x x x x x x x x c Type: Checking Savings See instructions. d Account number XXX X X X X X X X X X X X X X X 21 Amount of line 19 you want applied to your 2019 estimated tax 21 22 Amount Amount you owe. Subtract line 18 from line 15. For details on how to pay, see instructions 22 You Owe 23 Estimated tax penalty (see instructions) ..... 23 Go to www.irs.gov/Form 1040 for instructions and the latest information. Form 1040 (2018) Complete Olds' Schedule 1 for 2018. OMB No. 1545-0074 Additional Income and Adjustments to Income SCHEDULE 1 (Form 1040) Department of the Treasury Internal Revenue Service 2018 Attach to Form 1040. Attachment Go to www.irs.gov/Form 1040 for instructions and the latest information. Sequence No. 01 Your social security number 111-11-1109 Name(s) shown on Form 1040 Alfred E. and Beulah A. Old Additional 1-9b Reserved 1-9b Income 10 Taxable refunds, credits, or offsets of state and local income taxes . 10 11 Alimony received 11 12 12 Business income or (loss). Attach Schedule C or C-EZ . Capital gain or loss). Attach Schedule D if required. If not required, check here 13 13 14 Other gains or losses). Attach Form 4797 14 15a Reserved. 15b 16a Reserved 16b 17 Rental real estate, royalties, partnerships, s corporations, trusts, etc. Attach Schedule E 17 18 Farm income or loss). Attach Schedule F 18 19 Unemployment compensation 19 20a Reserved 20b 21 Other income. List type and amount 21 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 22 23 Educator expenses...... 23 Adjustments to Income 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 ..... 24 25 Health savings account deduction. Attach Form 8889. 25 26 Moving expenses for members of the Armed Forces. Attach Form 3903., 26 27 Deductible part of self-employment tax. Attach Schedule SE.. 27 28 Self-employed SEP, SIMPLE, and qualified plans 28 29 Self-employed health insurance deduction . 29 30 Penalty on early withdrawal of savings ..... 30 31a 123-45- Alimony paid b Recipient's SSN 6788 31a 32 IRA deduction .... 32 33 Student loan interest deduction 33 34 Reserved. 34 35 Reserved. 35 36 Add lines 23 through 35. 36 BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040) 2018