Problem 16-42 (LO. 5) Phil and Susan Hammond are married taxpayers filing a joint return. The couple have two dependent children. Susan Hammond has wages of $34,000 in 2018. Phil does not work due to a disability, but he is a buyer and seller of stocks. He generally buys and holds for long-term gain but occasionally gets in and out of a stock quickly. The couple's 2018 stock transactions are detailed below. In addition, they have $2,300 of qualifying dividends. Date Item Acquired Blue stock (10 shares) 11/10/17 Purple stock (100 shares) 12/13/16 Beige stock (50 shares) 12/14/13 12/14/13 Red stock (100 shares) 06/29/17 Black stock (100 shares) 05/15/17 Gray stock (100 shares) 04/23/16 Date Sold 03/12/18 05/23/18 0 7/14/18 05/18/18 10/18/18 10/18/18 cost $3,000 36,000 13,000 26,000 67,000 89,000 Sales Price $6,000 32,000 14,500 27,000 67,800 88,200 a. Determine the nature and amount of the gain or loss for each of the stock transactions Item Type of Gain or Loss Amount Blue stock Short-term capital gain 3,000 Purple stock L ong-term capital loss 4,000 Beige stock Long-term capital gain 1,500 Red stock Short-term capital gain 1,000 b. What is Phil and Susan's AGI? of Phil and Susan have a net short-term capital gain of $ 1,500 X and a net long-term capital loss 2,500 V. Consequently, there is an overall net short-term capital gain of 3,000 X Phil's and Susan's AGI is $ 37,800 . Book Calculator Part I Short-Term. Transactions involving capital assets you held 1 year or less are short term (see instructions). For long-term transactions, see page 2 Note: You may aggregate all short-term transactions reported on Form(s) 1099-8 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) 1099-B showing basis was reported to the IRS (see Note above) (6) 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 (h) (c) (d) gain or loss. If you enter Gain or loss). Description of property Date acquired Date sold or Proceeds Cost or other an amount in column (9), Subtract column (Example: 100 sh. XYZ (Mo., day, y) disposed of sales price) basis. See the enter a code in column (1) (e) from column Co.) (Mo., day, y.) (see Note below and see the separate (d) and combine instructions) see Column (e) instructions the result with in the separate (O) (9) column (9) instructions Code(s) from Amount of instructions adjustment 10 shares of Blue Company 11/10/17 03/12/18 100 shares of Red Company 06/29/17 05/18/18 2 Totals. Add the amounts in columns (d), (e), (9), and (h) (subtract negative amounts). Enter each total here and indude on your schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (1 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 (9) to correct the basis. See Column (a) in the separate instructions for how to figure the amount of the adjustment. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 37768Z Form 8949 (2018) Form 8949 (2018) Attachment Sequence No. 12A Page 2 Name(s) shown on return. Name and SSN or taxpayer identification no. not Social security number or taxpayer identification required if shown on other side number Phil and Susan Hammond 123-45-6789 Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 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. Part II Long-Term. Transactions involving capital assets you held more than 1 year are long term (see instructions). For short-term transactions. See page 1. (a) Description of property (Example: 100 sh.XYZ Co.) (6) Date acquired (Mo., day, yr.) Date sold or disposed of (Mo., day, yr.) Adjustment, if any, (h) (d) (e) to gain or loss. If you Gain or Proceeds Cost or other basis. enter an amount in (loss). (sales price) See the Note below column (g), enter a Subtract (see and see Column (e) code in column (f). See column (e) instructions) in the separate the separate from column instructions instructions. (d) and combine the result with Code(s) (9) Amount of column (9) from adjustment instructions 100 shares of Purple Company 12/13/16 05/23/18 50 shares of Beige Company 12/14/13 07/14/18 05/15/17 10/18/18 100 shares of Black Company 100 shares of Gray Company 04/23/16 10/18/18 2 Totals. Add the amounts in columns (d), (e), (9), and (h) (subtract negative amounts). Enter each total here and include on your schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (1 Box F above is checked) Note: If you checked Box D 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 (9) to correct the basis. See Column() in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2018) Problem 16-42 (LO. 5) Phil and Susan Hammond are married taxpayers filing a joint return. The couple have two dependent children. Susan Hammond has wages of $34,000 in 2018. Phil does not work due to a disability, but he is a buyer and seller of stocks. He generally buys and holds for long-term gain but occasionally gets in and out of a stock quickly. The couple's 2018 stock transactions are detailed below. In addition, they have $2,300 of qualifying dividends. Date Item Acquired Blue stock (10 shares) 11/10/17 Purple stock (100 shares) 12/13/16 Beige stock (50 shares) 12/14/13 12/14/13 Red stock (100 shares) 06/29/17 Black stock (100 shares) 05/15/17 Gray stock (100 shares) 04/23/16 Date Sold 03/12/18 05/23/18 0 7/14/18 05/18/18 10/18/18 10/18/18 cost $3,000 36,000 13,000 26,000 67,000 89,000 Sales Price $6,000 32,000 14,500 27,000 67,800 88,200 a. Determine the nature and amount of the gain or loss for each of the stock transactions Item Type of Gain or Loss Amount Blue stock Short-term capital gain 3,000 Purple stock L ong-term capital loss 4,000 Beige stock Long-term capital gain 1,500 Red stock Short-term capital gain 1,000 b. What is Phil and Susan's AGI? of Phil and Susan have a net short-term capital gain of $ 1,500 X and a net long-term capital loss 2,500 V. Consequently, there is an overall net short-term capital gain of 3,000 X Phil's and Susan's AGI is $ 37,800 . Book Calculator Part I Short-Term. Transactions involving capital assets you held 1 year or less are short term (see instructions). For long-term transactions, see page 2 Note: You may aggregate all short-term transactions reported on Form(s) 1099-8 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) 1099-B showing basis was reported to the IRS (see Note above) (6) 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 (h) (c) (d) gain or loss. If you enter Gain or loss). Description of property Date acquired Date sold or Proceeds Cost or other an amount in column (9), Subtract column (Example: 100 sh. XYZ (Mo., day, y) disposed of sales price) basis. See the enter a code in column (1) (e) from column Co.) (Mo., day, y.) (see Note below and see the separate (d) and combine instructions) see Column (e) instructions the result with in the separate (O) (9) column (9) instructions Code(s) from Amount of instructions adjustment 10 shares of Blue Company 11/10/17 03/12/18 100 shares of Red Company 06/29/17 05/18/18 2 Totals. Add the amounts in columns (d), (e), (9), and (h) (subtract negative amounts). Enter each total here and indude on your schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (1 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 (9) to correct the basis. See Column (a) in the separate instructions for how to figure the amount of the adjustment. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 37768Z Form 8949 (2018) Form 8949 (2018) Attachment Sequence No. 12A Page 2 Name(s) shown on return. Name and SSN or taxpayer identification no. not Social security number or taxpayer identification required if shown on other side number Phil and Susan Hammond 123-45-6789 Before you check Box D, E, or F below, see whether you received any Form(s) 1099-B or substitute statement(s) from your broker. A substitute statement will have the same information as Form 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. Part II Long-Term. Transactions involving capital assets you held more than 1 year are long term (see instructions). For short-term transactions. See page 1. (a) Description of property (Example: 100 sh.XYZ Co.) (6) Date acquired (Mo., day, yr.) Date sold or disposed of (Mo., day, yr.) Adjustment, if any, (h) (d) (e) to gain or loss. If you Gain or Proceeds Cost or other basis. enter an amount in (loss). (sales price) See the Note below column (g), enter a Subtract (see and see Column (e) code in column (f). See column (e) instructions) in the separate the separate from column instructions instructions. (d) and combine the result with Code(s) (9) Amount of column (9) from adjustment instructions 100 shares of Purple Company 12/13/16 05/23/18 50 shares of Beige Company 12/14/13 07/14/18 05/15/17 10/18/18 100 shares of Black Company 100 shares of Gray Company 04/23/16 10/18/18 2 Totals. Add the amounts in columns (d), (e), (9), and (h) (subtract negative amounts). Enter each total here and include on your schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (1 Box F above is checked) Note: If you checked Box D 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 (9) to correct the basis. See Column() in the separate instructions for how to figure the amount of the adjustment. Form 8949 (2018)