Practice Set #1 and Writing Assignment Mike Monroe (Social Security number 112-11-2111) is 55 years old and was married to Marilyn Monroe (Social Security number 124-54-6789). Marilyn died on December 15, 2020. Mike inherited all of Marilyn's assets. She was 55 years old when she passed away. Mike continues to live at 999 Newport Blvd., Tustin, CA 92782 with his dependent child. Mike, Jr. Age 11 and Timothy Age 16. Mike's Social Security number is 123-45-6888 and Timothy's Social Security Number is 252-65-9523. Mike had the following transactions in 2021: 1. Mike received $265,000 included in his W-2 Box 1 from Alfie Corporation, where he is an accountant. Withholding for Federal income tax was $30,250. Assume the proper amount of Social Security and Medicare tax has been withheld including the .9% ACA Medicare tax (if any). 2. Marilyn was working for XYZ corporation prior to her death. Mike received $5,000 for funeral expenses from her employer to assist Mike. The amount was received in 2021. 3. Mike's father passed-away in 2020 and in 2021 he received a parcel of Land worth $ 1,750,000. There was also a Life Insurance policy from American International Group (AIG) of $2,000.000 where Mike was the sole beneficiary. The proceeds were paid to him in an annuity of $225,000 per year for 10 years starting January 1, 2021. 4. Mike received $4,200 interest on Tustin school district bonds. 5. Mike received $12,000 of interest on Treasury bills. 6. Mike received $4,500 interest from a CD at Wells Fargo. 7. Mike inherited an IRA account of $15,000 from his father. He took $7,500 out of the account to meet living expenses in 2021. 8. Mike received dividends of $25,000 noted in Box la of the 1099-DIV. Of which $15,000 were dividends from Vodaphone Group PLC stock (a UK listed Company) that he has owned for 250 days, and the remaining $10,000 dividends were from Apple, Inc. Stock which he has owed for 40 days. 9. Mike incurred $10,500 of interest expense on a margin loan with Merrill Lynch which was used to purchase investments. 40% of the loan was used to purchase the Tustin school district bonds 10. Mike received 250 shares of Orange Corporation common stock (purchased in 2017) as a stock dividend. The shares had a fair market value of $10,500 at the time he received them, and she did not have the option of receiving cash. 11. Mike paid $15,500 alimony to his former wife, Monica Monroe (Social Security number 124-48- 8786). The divorce was finalized in 2002. 12. Mike kept the receipts for their 2021 sales taxes paid of $3,100. 13. Mike's other deductions are as follows: " Real estate taxes on their principal residence were $9,500. Mortgage interest on their principal residence was $20,500. Cash contributions to the church totaled $8,500. Non-cash contributions of $450 to Goodwill Industries. Medical Expenses related to Doctor's, etc. of $45,000 (Note the maximum amount was paid out of their Health Savings Account see below). Job related unreimbursed expenses of $9,500 related to travel for his job. Tax Preparation Fees of $2,000. Contributions to the Mayor of Irvine's campaign of $2,900. State income tax paid and withheld totaled $ 6,500 14. Mike set up a new Health Savings Account for the maximum amount allowed in 2021. He has a high deductible medical plan at Alfie Corporation The account earned $1,000 of interest income in 2021. The balance in the account was zero at 12/31/2021. 15. Mike contributed $7,000 to each of the kids 529 plans in 2021. Compute the Monroe's net federal tax payable (or refund due) 2021. Use the 1040 and applicable other forms that you need to file a return with the IRS for 2021. Do not prepare the California return. You have been provided Intuit in Canvas to complete this assignment. You can also use your own software or prepare by hand if you so desired. In addition to the federal returns for 2021, you need to prepare a narrative explaining all the items in this problem and why income items are taxable or nontaxable and why deduction items are deductible or not deductible. Lastly, you need to discuss the 2021 return and describe in your narrative your observations of the Mike Monroe's tax situation and impacts of the Tax Cuts Job Act of 2017 (tax reform) to their tax situation. Returns turned in without a narrative will not get credit for this assignment. The assignment is due February 15, 2022 11:55pm. Project is worth 150 points. Turn in via canvas