Pratt is ready to graduate and leave College Park. His future employer (Ferndale Corp.) offers the following four compensation packages from which Pratt may choose. Pratt will start working for Ferndale on January 1, year 1. Benefit Description Salary Health insurance Restricted stock NQO's Option 1 $ 60,880 No coverage Option 2 $50,000 $ 5,000 @ @ Option 3 $45,880 $5, 1,800 shares @ Option 4 $45, eee $ 5,eee 180 options Assume that the restricted stock Is 1,000 shares that trade at $5 per share on the grant date (January 1, year 1); shares are expected to be worth $10 per share on the vesting date at the end of year 1, and no 83(b) election is made. Assume that the NQOS (100 options) each allow the employee to purchase 10 shares at $5 exercise price. The stock trades at $5 per share on the grant date (January 1 year 1) and is expected to be worth $10 per share on the vesting date at the end of year 1, and the options are exercised and sold at the end of the year. Also assume that Pratt spends on average $3,000 on health-related costs that will be covered by Insurance if he had coverage or is an after-tax expense if he isn't covered by Insurance (treat this as a cash outflow). Assume that Pratt's marginal tax rate is 35 percent. (Ignore FICA taxes and time value of money considerations). c. Assuming Pratt chooses Option 3 and sells the stock on the vesting date on the last day of year 1), complete Pratt's Schedule D and Form 8949 for the sale of the restricted stock. (Input all the values as positive numbers. Use 2019 tax rules regardless of year on tax form.) Schedule D Form 8949 PG1 SCHEDULED Capital Gains and Losses OMB No 1545-0074 (Form 1040) Attach to Form 1040 or Form 1040NR. 2018 Department of the Treasury Go to www.irs.gov/Schedule for instructions and the latest information: Internal Revenue Service (99) Use Form 8949 to list your transactions for lines 1b. 2, 3, 8, 9 and 10. Attachment Sequence No. 12 Name(s) shown on return Your social security number Pratt Partl Short-Term Capital Gains and Losses-Generally Assets Held One Year or Less (see instructions) (9) Adjustments to See instructions for how to figure the amounts to enter on the lines below. d) Proceeds (sales | (e) Cost (or other gain or loss from h) Gain or loss). Subtract column (e) from price) basis) Form(s) 8949, Part 1 column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars line 2 column (9) 1a Totals for all short-term transactions reported on Form 1099-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b 1b Totals for all transactions reported on Form(s) 8949 with Box A checked 2 Totals for all transactions reported on Formis) 8949 with Box 8 checked 3 Totals for all transactions reported on Forms) 8949 with Box C checked 4 Short-term gain from Form 6252 and short-term gain or loss) from Forms 4884, 6781, and 8824 5 Net short-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions 7 Net short-term capital gain or loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part Il below. Otherwise, go to Partill on the back Part II Long-Term Capital Gains and Losses-Generally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines below. (9Adjustments to (d) Proceeds (sales (e) Cost (or other gain or loss from h) Gain or loss) Subtract column (e) from price basis Formis) 8949, Part column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars Il line 2. column (9) 8a Totals for all long-term transactions reported on Form 1099-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b 8b Totals for all transactions reported on Formis) 8949 with Box D checked 9 Totals for all transactions reported on Form(s) 8949 with Box E checked 10 Totals for all transactions reported on Formis) 8949 with Box F checked 11 Gain from Form 4797, Part : long-term gain from Forms 2439 and 6252 and long-term gain or loss) from Forms 4884.6781, and 8824 11 12 Net long-term gain or loss) from partnerships, Scorporations, estates, and trusts from Schedule(s) K-1 13 Capital gain distributions. See the instructions 13 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions 15 Net long-term capital gain or loss). Combine lines 8a through 14 in column (h). Then go to Part III on the back For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 11338H Schedule D (Form 1040) 2018 Olololo Schedule D Form 8949 PG1 Form 8949 Sales and Other Dispositions of Capital Assets OMB No 1545-0074 2018 Department of the Treasury - Internal Revenue Go to www.irs.gow Form8949 for instructions and the latest information Service File with your Schedule D to list your transactions for lines 1b. 2. 3. 86, 9, and 10 of Schedule D. Attachment Sequence No. 12A Name(s) shown on return Social security number or taxpayer identification number Pratt Before you check Box A, B, or C below, see whether you received any Form(s) 1099-8 or substitute statement(s) from your broker. A substitute statement will have the same information as Fom 1099-8. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check Partl Short-Term. Transactions involving capital assets you held 1 year or less are generally short-term see instructions). For long-term transactions, see page 2 Note: You may aggregate all short-term transactions reported on Form(s) 1099-5 showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 1a: you aren't required to report these transactions on Form 8949 (see instructions) You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need A ) Short-term transactions reported on Form(s) 1009-B showing basis was reported to the IRS (see Note above) (8) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B Adjustment, if any, to gain or loss. If you enter (h) Gain or loss). (e) Cost or other basis. an amount in columna enter a code in Subtract column e See the Note below and (a) Description of property D ate sold or disposed of column (f). See the separate instructions b) Date acquired (Mo d) Proceeds (sales from column (d) and price (see see Column (e) in the Example: 100 sh.XYZ Co.) day yr.) (Mo.. day. yr.) separate instructions (f) Codels) from 9) Amount of 1 combine the result with instructions) instructions adjustment columna) 1,000 shares of Ferndale 12/31/2019 12/31/2019 stock N 2 Totals. Add the amounts in columns (d), (e). (), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked). or line 3 (if Box C above is checked) Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment Pratt is ready to graduate and leave College Park. His future employer (Ferndale Corp.) offers the following four compensation packages from which Pratt may choose. Pratt will start working for Ferndale on January 1, year 1. Benefit Description Salary Health insurance Restricted stock NQO's Option 1 $ 60,880 No coverage Option 2 $50,000 $ 5,000 @ @ Option 3 $45,880 $5, 1,800 shares @ Option 4 $45, eee $ 5,eee 180 options Assume that the restricted stock Is 1,000 shares that trade at $5 per share on the grant date (January 1, year 1); shares are expected to be worth $10 per share on the vesting date at the end of year 1, and no 83(b) election is made. Assume that the NQOS (100 options) each allow the employee to purchase 10 shares at $5 exercise price. The stock trades at $5 per share on the grant date (January 1 year 1) and is expected to be worth $10 per share on the vesting date at the end of year 1, and the options are exercised and sold at the end of the year. Also assume that Pratt spends on average $3,000 on health-related costs that will be covered by Insurance if he had coverage or is an after-tax expense if he isn't covered by Insurance (treat this as a cash outflow). Assume that Pratt's marginal tax rate is 35 percent. (Ignore FICA taxes and time value of money considerations). c. Assuming Pratt chooses Option 3 and sells the stock on the vesting date on the last day of year 1), complete Pratt's Schedule D and Form 8949 for the sale of the restricted stock. (Input all the values as positive numbers. Use 2019 tax rules regardless of year on tax form.) Schedule D Form 8949 PG1 SCHEDULED Capital Gains and Losses OMB No 1545-0074 (Form 1040) Attach to Form 1040 or Form 1040NR. 2018 Department of the Treasury Go to www.irs.gov/Schedule for instructions and the latest information: Internal Revenue Service (99) Use Form 8949 to list your transactions for lines 1b. 2, 3, 8, 9 and 10. Attachment Sequence No. 12 Name(s) shown on return Your social security number Pratt Partl Short-Term Capital Gains and Losses-Generally Assets Held One Year or Less (see instructions) (9) Adjustments to See instructions for how to figure the amounts to enter on the lines below. d) Proceeds (sales | (e) Cost (or other gain or loss from h) Gain or loss). Subtract column (e) from price) basis) Form(s) 8949, Part 1 column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars line 2 column (9) 1a Totals for all short-term transactions reported on Form 1099-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b 1b Totals for all transactions reported on Form(s) 8949 with Box A checked 2 Totals for all transactions reported on Formis) 8949 with Box 8 checked 3 Totals for all transactions reported on Forms) 8949 with Box C checked 4 Short-term gain from Form 6252 and short-term gain or loss) from Forms 4884, 6781, and 8824 5 Net short-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 6 Short-term capital loss carryover. Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions 7 Net short-term capital gain or loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part Il below. Otherwise, go to Partill on the back Part II Long-Term Capital Gains and Losses-Generally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines below. (9Adjustments to (d) Proceeds (sales (e) Cost (or other gain or loss from h) Gain or loss) Subtract column (e) from price basis Formis) 8949, Part column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars Il line 2. column (9) 8a Totals for all long-term transactions reported on Form 1099-8 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b 8b Totals for all transactions reported on Formis) 8949 with Box D checked 9 Totals for all transactions reported on Form(s) 8949 with Box E checked 10 Totals for all transactions reported on Formis) 8949 with Box F checked 11 Gain from Form 4797, Part : long-term gain from Forms 2439 and 6252 and long-term gain or loss) from Forms 4884.6781, and 8824 11 12 Net long-term gain or loss) from partnerships, Scorporations, estates, and trusts from Schedule(s) K-1 13 Capital gain distributions. See the instructions 13 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions 15 Net long-term capital gain or loss). Combine lines 8a through 14 in column (h). Then go to Part III on the back For Paperwork Reduction Act Notice, see your tax return instructions. Cat No. 11338H Schedule D (Form 1040) 2018 Olololo Schedule D Form 8949 PG1 Form 8949 Sales and Other Dispositions of Capital Assets OMB No 1545-0074 2018 Department of the Treasury - Internal Revenue Go to www.irs.gow Form8949 for instructions and the latest information Service File with your Schedule D to list your transactions for lines 1b. 2. 3. 86, 9, and 10 of Schedule D. Attachment Sequence No. 12A Name(s) shown on return Social security number or taxpayer identification number Pratt Before you check Box A, B, or C below, see whether you received any Form(s) 1099-8 or substitute statement(s) from your broker. A substitute statement will have the same information as Fom 1099-8. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check Partl Short-Term. Transactions involving capital assets you held 1 year or less are generally short-term see instructions). For long-term transactions, see page 2 Note: You may aggregate all short-term transactions reported on Form(s) 1099-5 showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 1a: you aren't required to report these transactions on Form 8949 (see instructions) You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need A ) Short-term transactions reported on Form(s) 1009-B showing basis was reported to the IRS (see Note above) (8) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (C) Short-term transactions not reported to you on Form 1099-B Adjustment, if any, to gain or loss. If you enter (h) Gain or loss). (e) Cost or other basis. an amount in columna enter a code in Subtract column e See the Note below and (a) Description of property D ate sold or disposed of column (f). See the separate instructions b) Date acquired (Mo d) Proceeds (sales from column (d) and price (see see Column (e) in the Example: 100 sh.XYZ Co.) day yr.) (Mo.. day. yr.) separate instructions (f) Codels) from 9) Amount of 1 combine the result with instructions) instructions adjustment columna) 1,000 shares of Ferndale 12/31/2019 12/31/2019 stock N 2 Totals. Add the amounts in columns (d), (e). (), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked). or line 3 (if Box C above is checked) Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. See Column (g) in the separate instructions for how to figure the amount of the adjustment