Note: This problem is for the 2020 tax year.

Daniel B. Butler and his spouse Freida C. Butler file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6780. Dan was born on January 15, 1969, and Freida was born on August 20, 1970.

During 2020, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home:

1. Gina, their daughter, age 22, a full-time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2020. Gina's Social Security number is 123-45-6788.
2. Willie, their son, age 19, graduated high school in May 2020. He is taking a leap year and will not begin college until 2021. He had gross income of $6,300 in 2020. Willie's Social Security number is 123-45-6787.
3. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786.

Dan was employed as a manager by WJJJ, Inc. (employer identification number 11-1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, KY 40701). Selected information from the W2 forms provided by the employers is presented below. Dan and Freida use the cash method.

Line	Description	Dan	Freida
1	Wages, tips, other compensation	$74,000	$86,000
2	Federal income tax withheld	11,000	12,400
17	State income tax withheld	2,960	3,440

Freida sold a house on December 30, 2020, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W2) on the January 10, 2021, closing date.

Other income (as reported on 1099 Forms) for 2020 consisted of the following:

Dividends on CSX stock (qualified)		$4,200
Interest on savings at Second Bank		1,600
Interest on City of Corbin bonds		900
Interest on First Bank CD		382

The $382 from First Bank was an original issue discount. Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2020. The CD was purchased on October 1, 2018, for $14,995, and the yield to maturity was 3.3%.

Dan participated on a game show and won a cash prize of $7,000.

In addition to the above information, Dan and Freida's itemized deductions included the following:

Paid on 2020 Kentucky income tax		$700
Personal property tax paid		600
Real estate taxes paid		1,800
Interest on home mortgage (Corbin S&L)		4,900

Sales tax from the sales tax table is $1,860. Dan and Freida made Federal estimated tax payments of $8,000. They have never owned or used any virtual currency, and they do not wish to contribute to the Presidential Election Campaign. For 2020, they received the correct amount of economic impact payments (2020 recovery credits). The Kentucky income tax rate is 4%.

Is all this correct?

1. Enter the amount from Form 1040 or 1040-SR, line 15. However, if you are filing Form 2555 or 2555-EZ (relating to foreign earned income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet (Taxable income)......--- 2. Enter the amount from Form 1040, line 3a* 2. 900 1. 148,382 3. Are you filing Schedule D?* 0 Yes Enter the smaller of line 15 or 16 of Schedule D. If 3. 0 either line 15 or line 16 is blank or a loss, enter -0- O No Enter the amount from Form 1040 or 1040-SR, line 7. 4. Add lines 2 and 3 4. 900 5. If filing Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that form. Otherwise, enter -0-.... 5. 0 6. Subtract line 5 from line 4. If zero or less, enter -0- 6. 900 7. Subtract line 6 from line 1. If zero or less, enter -O- 7. 147,482 8. Enter: $40,000 if single or married filing separately, $80,000 if married filing jointly or qualifying widow(er), 8. 80,000 $53,600 if head of household. 9. Enter the smaller of line 1 or line 8. 9. 80,000 10. Enter the smaller of line 7 or line 9 10. 80,000 11. Subtract line 10 from line 9. This amount is taxed at 0% 11. 0 12. Enter the smaller of line 1 or line 6. 12. 900 13. Enter the amount from line 11. 13. 0 14. Subtract line 13 from line 12 ... 14. 900 15. Enter: $441,450 if single, $248,300 if married filing separately, 15, 496,600 $496,600 if married filing jointly or qualifying widow(er), $469.050 if head of household. 16. Enter the smaller of line 1 or line 15 16. 148,382 17. Add lines 7 and 11 17. 147,482 18. Subtract line 17 from line 16. If zero or less, enter -O- 18. 900 19. Enter the smaller of line 14 or line 18. 19. 900 20. Multiply line 19 by 15% (0.15). 20. 135 21. Add lines 11 and 19. 21. 900 22. Subtract line 21 from line 12 22. 0 23. Multiply line 22 by 20% (0.20). 23. 0 24. Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet 24. 26,780 25. Add lines 20, 23, and 24. 25. 26,915 26. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet 26. 26,780 27. Tax on all taxable income. Enter the smaller of line 25 or 26. Also include this amount on the entry space on 27. Tax on all taxable income. Enter the smaller of line 25 or 26. Also include this amount on the entry space on Form 1040 or 1040-SR, line 16. If you are filing Form 2555, don't enter this amount on the entry space on Form 1040 or 1040-SR, line 16. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet. 27. 26,780 1. Enter the amount from Form 1040 or 1040-SR, line 15. However, if you are filing Form 2555 or 2555-EZ (relating to foreign earned income), enter the amount from line 3 of the Foreign Earned Income Tax Worksheet (Taxable income)......--- 2. Enter the amount from Form 1040, line 3a* 2. 900 1. 148,382 3. Are you filing Schedule D?* 0 Yes Enter the smaller of line 15 or 16 of Schedule D. If 3. 0 either line 15 or line 16 is blank or a loss, enter -0- O No Enter the amount from Form 1040 or 1040-SR, line 7. 4. Add lines 2 and 3 4. 900 5. If filing Form 4952 (used to figure investment interest expense deduction), enter any amount from line 4g of that form. Otherwise, enter -0-.... 5. 0 6. Subtract line 5 from line 4. If zero or less, enter -0- 6. 900 7. Subtract line 6 from line 1. If zero or less, enter -O- 7. 147,482 8. Enter: $40,000 if single or married filing separately, $80,000 if married filing jointly or qualifying widow(er), 8. 80,000 $53,600 if head of household. 9. Enter the smaller of line 1 or line 8. 9. 80,000 10. Enter the smaller of line 7 or line 9 10. 80,000 11. Subtract line 10 from line 9. This amount is taxed at 0% 11. 0 12. Enter the smaller of line 1 or line 6. 12. 900 13. Enter the amount from line 11. 13. 0 14. Subtract line 13 from line 12 ... 14. 900 15. Enter: $441,450 if single, $248,300 if married filing separately, 15, 496,600 $496,600 if married filing jointly or qualifying widow(er), $469.050 if head of household. 16. Enter the smaller of line 1 or line 15 16. 148,382 17. Add lines 7 and 11 17. 147,482 18. Subtract line 17 from line 16. If zero or less, enter -O- 18. 900 19. Enter the smaller of line 14 or line 18. 19. 900 20. Multiply line 19 by 15% (0.15). 20. 135 21. Add lines 11 and 19. 21. 900 22. Subtract line 21 from line 12 22. 0 23. Multiply line 22 by 20% (0.20). 23. 0 24. Figure the tax on the amount on line 7. If the amount on line 7 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet 24. 26,780 25. Add lines 20, 23, and 24. 25. 26,915 26. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to figure the tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet 26. 26,780 27. Tax on all taxable income. Enter the smaller of line 25 or 26. Also include this amount on the entry space on 27. Tax on all taxable income. Enter the smaller of line 25 or 26. Also include this amount on the entry space on Form 1040 or 1040-SR, line 16. If you are filing Form 2555, don't enter this amount on the entry space on Form 1040 or 1040-SR, line 16. Instead, enter it on line 4 of the Foreign Earned Income Tax Worksheet. 27. 26,780