Note: This problem is for the 2020 tax year.

Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 43466, and her Social Security number is 123-45-6777. Ashley is single and has a 20-year-old son, Bill. His Social Security number is 111-11-1112. Bill lives with Ashley, and she fully supports him. Bill spent 2020 traveling in Europe and was not a college student. He had gross income of $4,655 in 2020.

Bill paid $4,000 of lodging expenses that Ashley reimbursed after they were fully documented. Ashley paid the $4,000 to Bill using a check from her sole proprietorship. That amount is not included in the items listed below. Ashley had substantial health problems during 2020, and many of her expenses were not reimbursed by her health insurance.

Ashley owns Panda Enterprises LLC (98-7654321), a data processing service that she reports as a sole proprietorship. Her business is located at 456 Hill Street, Wayne, OH 43466. The business activity code is 514210. Her 2020 Form 1040, Schedule C for Panda Enterprises shows revenues of $315,000, office expenses of $66,759, employee salary of $63,000, employee payroll taxes of $4,820, business meal expenses (before the 50% reduction) of $22,000, and rent expense of $34,000. The rent expense includes payments related to renting an office ($30,000) and payments related to renting various equipment ($4,000). There is no depreciation because all depreciable equipment owned has been fully depreciated in previous years. No fringe benefits are provided to the employee. Ashley personally purchases health insurance on herself and Bill. The premiums are $23,000 per year.

Ashley has an extensive stock portfolio and has prepared the following analysis:

Stock	Number of Shares			Date Purchased	Date Sold	Per-Share Cost			Per-Share Selling Price			Total Dividends
Beige		10		10/18/2019	10/11/2020		$80			$74			$30
Garland		30		10/11/2013	10/11/2020		43			157			70
Peach		15		3/10/2020	8/11/2020		62			33			45

Note: Ashley received a Form 1099B from her stockbroker that included the adjusted basis and sales proceeds for each of her stock transactions. The per-share cost includes commissions, and the per-share selling price is net of commissions. Also, the dividends are the actual dividends received in 2020, and these are both ordinary dividends and qualified dividends.

Ashley had $800 of interest income from State of Ohio bonds and $600 of interest income on her Wayne Savings Bank account. She paid $25,000 of alimony to her former husband (divorce finalized in June 2017). His Social Security number is 123-45-6788.

Ashley itemizes her deductions and provides the following information, which may be relevant to her return:

Item	Amount		Comment
Unreimbursed medical expenses for Ashley	$9,748		Does not include health insurance premiums.
State income taxes paid	1,830
Real property taxes on personal residence	3,230
Interest paid on home mortgage (Form 1098)	8,137		The loan is secured by the residence and was incurred when the home was purchased.
Charitable contributions	1,399		$940 cash payments to Ashleys church and $459 cash payments made to homeless persons for whom she felt sorry. She can document all the expenditures.
Sales taxes	619		Amount per sales tax table.

Ashley paid $27,000 in estimated Federal income taxes, did not engage in any virtual currency transactions during the year, does not want any of her taxes to finance presidential elections, has no foreign bank accounts or trusts, and wants any refund to be applied against her 2021 taxes. Ashley received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.

Compute Ashley's net tax payable or refund due for 2020. If you use tax forms for your computations, you will need Form 1040 and its Schedules 1, 2, 3, A, C, D, and SE, Form 8949 and the Qualified Dividends and Capital Gain Tax Worksheet. Ashley qualifies for the 199A deduction for qualified business income.

• Make realistic assumptions about any missing data.
• If an amount box does not require an entry or the answer is zero, enter "0".
• Enter all amounts as positive numbers, unless otherwise instructed.
• It may be necessary to complete the tax schedules before completing Form 1040.
• When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.
• Use the Tax Rate Schedule provided. Do not use the Tax Tables.

(Please complete every necessary form)

Question Content Area

Use the 2020 Tax Rate Schedules to compute 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.)

2020 Tax Rate Schedules
SingleSchedule X										Head of householdSchedule Z
If taxable income is: Over		But not over		The tax is:				of the amount over			If taxable income is: Over		But not over		The tax is:				of the amount over
$ 0		$ 9,875		. . . . . .		10%		$ 0			$ 0		$ 14,100		. . . . . .		10%		$ 0
9,875		40,125		$ 987.50	+	12%		9,875			14,100		53,700		$ 1,410.00	+	12%		14,100
40,125		85,525		4,617.50	+	22%		40,125			53,700		85,500		6,162.00	+	22%		53,700
85,525		163,300		14,605.50	+	24%		85,525			85,500		163,300		13,158.00	+	24%		85,500
163,300		207,350		33,271.50	+	32%		163,300			163,300		207,350		31,830.00	+	32%		163,300
207,350		518,400		47,367.50	+	35%		207,350			207,350		518,400		45,926.00	+	35%		207,350
518,400		. . . . . .		156,235.00	+	37%		518,400			518,400		. . . . . .		154,793.50	+	37%		518,400
Married filing jointly or Qualifying widow(er)Schedule Y-1										Married filing separatelySchedule Y-2
If taxable income is: Over		But not over		The tax is:				of the amount over			If taxable income is: Over		But not over		The tax is:				of the amount over
$ 0		$ 19,750		. . . . . .		10%		$ 0			$ 0		$ 9,875		. . . . . .		10%		$ 0
19,750		80,250		$ 1,975.00	+	12%		19,750			9,875		40,125		$ 987.50	+	12%		9,875
80,250		171,050		9,235.00	+	22%		80,250			40,125		85,525		4,617.50	+	22%		40,125
171,050		326,600		29,211.00	+	24%		171,050			85,525		163,300		14,605.50	+	24%		85,525
326,600		414,700		66,543.00	+	32%		326,600			163,300		207,350		33,271.50	+	32%		163,300
414,700		622,050		94,735.00	+	35%		414,700			207,350		311,025		47,367.50	+	35%		207,350
622,050		. . . . . .		167,307.50	+	37%		622,050			311,025		. . . . . .		83,653.75	+	37%		311,025