PROBLEM

Kyle Peterson (born 3/1/1980, Social Security #914-33-2342) is divorced and blind. He lives with his girlfriend, Loretta Smith all year. Loretta Smith is a full-time student at SFSU (born 1/31/2000, SS #565-33-2222). She is on a scholarship of $8,000 for tuition, books and supplies + $1500 for room and board. Kyle provides more than half her support. In addition, Loretta earns $900 interest income from Bank of America and $1100 salary. She had $84 Social Security taxes withheld, Fed Tax Withholding of $102, and Ca. State Tax withholding of $55. Loretta paid $1100 in medical expenses in 2019. Kyle is divorced from his wife Nancy Drew. They were divorced in 2012. They have one daughter Hillary, born 4/15/2002, (SS #888-88-888) who lives with Kyle for 6 months and with Nancy for 6 months. Nancy provides more than half her support. Hillary has no income. Nancys AGI is $130,000. Kyle pays $12,000 alimony in 2019 to Nancy Drew and $14,000 in child support to Hillary In addition Kyle has three children with his second wife, Ramona Harrison. Randy (Born 8/2 2006), SS # 818-44-3312) and Karl born 9/3/2004) (SS # 513-313-3333) and Marcy (Born 11/3/2001) (SS # 513-66-6667). Marcy is a full-time student at SFSU. Kyle has custody of all three children. Randy and Karl live with him all year. Marcy lives on campus and has a job in which she earns $8500. Kyle provide more than half her support. Kyle provides more than half the support for Karl and Randy. Marcy comes home during summer vacations. Kyle also provides more than half of the support for his mother Harriet Lam, Age 68, (412-33-1243) who lives in her own apartment. Harriet is single. Her only income is social security of $12,121, interest income of $2200, and salary of $1800. The Petersons reside at 1300 Hill Street, Walnut Creek, Ca. 94135. Kyle is an employed as a sales manager at Winthrop Corporation in San Francisco. Kyle received the following W-2 form from his employer:

He also received a 1099 for doing some consulting work for a firm as follows. The income qualifies for the Qualified Business Income Deduction.

Kyle also received the following 1099-Div:

Kyle also provided the following information

Qualified Home mortgage interest expense paid to B of A (Received 1098).		18,135
Property taxes on home		17,235
Payment to dentist for braces for Randy and Karl		18,235
Kyle won a new car in raffle with a FMV of $26,000		26,000
Sold 323 shares Carnival Corp stock on 3/15/2019 for $15,500 they purchased on 1/1/2005 for $5500,		?
Kyle spent $3,100 for auto expenses related to his job for which he was not reimbursed		3100
Tax return preparation fee		800
Kyle paid Merrill Lynch a fee to manage his investments		600
Interest income from SF City Bonds		8731
Interest income from US Treasury bonds		3,732
Charitable contribution by check to San Francisco State University		9,482
Federal Estimated Tax paid for 2019 tax year		4,915

In addition: Kyle received a $2300 refund on 5/15/2019 for overpayment of 2018 California State Income Tax. Kyles itemized deductions in 2018 totaled $24,900. The standard deduction for 2018 was $24,000. His grandmother died and he received the proceeds from her life insurance policy of $20,000. Kyles employer paid $385 per month to provide Kyle with parking in downtown San Francisco.

Kyle contributed $12,000 to a 529 plan for Randy. The money was invested in a mutual fund which paid $400 interest income.

Kyle wants any overpayment of his federal tax credited toward next years taxes in 2019.

1. QUESTION 1

Briefly explain if Kyle can take the Child Tax Credit or ODC for

Loretta, Hillary, Randy, Karl, Marcy, Harriet

2. QUESTION 2: Compute Kyles Tax Due or Refund

	Taxable Income	Tax on Income	Computation of Tax on Ordinary and LTCG
Ordinary Income
LTCG
Qualified Dividend
Total
Less Credits
Less Prepayments
Tax Due

1. QUESTION 3: What is the marginal tax bracket of Kyle Peterson?

2. QUESTION 4:
   1. What is Kyles average federal income tax rate?

3. QUESTION 5: What is Kyles effective tax rate?

4. QUESTION 6: How much tax would Kyle Peterson save if he increased his charitable contribution by $4000 to $13,482.

Staple Kyle Petersons Tax Return: In the following order: 1040 Page 1 and 2, Schedule 1, Schedule 3, Schedule A, Schedule B, Schedule D.

Attach Lorettas 1040 Tax Return

Form W-2 2019 Wage and Tax Statement Copy A for Social Security Administration Void a Employee's social security number 981-98-1311 b Employer identification number (EIN) 22-2222222 c Employer's name, address, and ZIP code PLACER CORPORATION 1 Wages, tips, other compensation 172433.00 3 Social security wages 172433.00 5 Medicare wages and tips 172433.00 7 Social security tips 2 Federal income tax withheld 30700.00 4 Social security tax withheld 8239.80 6 Medicare tax withheld 2500.27 8 Allocated tips 3131 MAIN STREET SAN FRANCISCO CA 94533-3 10 Dependent care benefits 11 Nonqualified plans 12 See instrs, for box 12 d Control number....... 333333333333 e Employee's first name and initial KYLE P Last name Suff. PETERSON 13 Statutory employee Retirement plan.... Third-party sick pay Oo f Employee's address and ZIP code 1300 HILL STREET WALNUT CREEK CA 14 Other 94533 16 15 Employer's state State identification no. CA State wages, tips, etc 172433.00 17 State income tax 12132.87 18 Local wages, tips, etc 19 Local income tax 20 Locality Name Form 1099-MISC 2019 Miscellaneous Income Copy A - File with Form 1096 2019 Void........... Corrected......... 1 Rents $ PAYER'S name, street address, city or town, state or province, country, ZIP, or foreign postal code, and telephone number. WINTHROP CORPORATION 2 Royalties 1500 SPEAR STREET SAN FRANCISCO CA 94132 3 Other income 6414.00 4 Federal income tax withheld $ PAYER'S Federal identification number 33-3333333 RECIPIENT'S name RECIPIENT'S identification number 914-33-2342 5 Fishing boat proceeds $ 7 Nonemployee compensation 6 Medical and health care payments $ 8 Substitute payments in lieu of dividends or interest KYLE PETERSON Street address (including apartment no.) 10 Crop insurance proceeds 1300 HILL STREET 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale..... D I 11 City or town, province or state, and ZIP or foreign postal code WALNUT CREEK CA 94132 Account number FATCA 2nd TIN not. filing red 13 Excess golden parachute payments 14 Gross proceeds paid to an attorney $ s OMB No. 1545-0110 U VOILU CORRECTEL PAYER'S name, street address, city or town, state or province, country, ZIP 1a Total ordinary dividends or foreign postal code, and telephone no. Sinclair Corp, 8,895 28282 Ford Road Detroit Michigin 30030 1b Qualified dividends 2019 Dividends and Distributions 4,322 2a Total capital gain distr. Form 1099-DIV 2b Unrecap. Sec. 1250 gain Copy 2 PAYER'S TIN RECIPIENT'S TIN 2c Section 1202 gain 2d Collectibles (28%) gain To be filed with recipient's state income tax return, when required. 33333333333 RECIPIENT'S name 3 Nondividend distributions | 4 Federal income tax withheld Kyle Peterson 5 Section 199A dividends 6 Investment expenses Street address (including apt. no.) 1300 Hill Street 7 Foreign tax paid 8 Foreign country or U.S. possession City or town, state or province, country, and ZIP or foreign postal code $ 9 Cash liquidation distributions 10 Noncash liquidation distribution Walnut Creek, Ca. 94132 FATCA filing 11 Exempt-interest dividends | 12 Specified private activity requirement bond interest dividends Account number (see instructions) 13 State | 14 State identification no. 15 State tax withheld Form 1099-DIV www.irs.gov/Form1099DIV Department of the Treasury - Internal Revenue Service Form W-2 2019 Wage and Tax Statement Copy A for Social Security Administration Void a Employee's social security number 981-98-1311 b Employer identification number (EIN) 22-2222222 c Employer's name, address, and ZIP code PLACER CORPORATION 1 Wages, tips, other compensation 172433.00 3 Social security wages 172433.00 5 Medicare wages and tips 172433.00 7 Social security tips 2 Federal income tax withheld 30700.00 4 Social security tax withheld 8239.80 6 Medicare tax withheld 2500.27 8 Allocated tips 3131 MAIN STREET SAN FRANCISCO CA 94533-3 10 Dependent care benefits 11 Nonqualified plans 12 See instrs, for box 12 d Control number....... 333333333333 e Employee's first name and initial KYLE P Last name Suff. PETERSON 13 Statutory employee Retirement plan.... Third-party sick pay Oo f Employee's address and ZIP code 1300 HILL STREET WALNUT CREEK CA 14 Other 94533 16 15 Employer's state State identification no. CA State wages, tips, etc 172433.00 17 State income tax 12132.87 18 Local wages, tips, etc 19 Local income tax 20 Locality Name Form 1099-MISC 2019 Miscellaneous Income Copy A - File with Form 1096 2019 Void........... Corrected......... 1 Rents $ PAYER'S name, street address, city or town, state or province, country, ZIP, or foreign postal code, and telephone number. WINTHROP CORPORATION 2 Royalties 1500 SPEAR STREET SAN FRANCISCO CA 94132 3 Other income 6414.00 4 Federal income tax withheld $ PAYER'S Federal identification number 33-3333333 RECIPIENT'S name RECIPIENT'S identification number 914-33-2342 5 Fishing boat proceeds $ 7 Nonemployee compensation 6 Medical and health care payments $ 8 Substitute payments in lieu of dividends or interest KYLE PETERSON Street address (including apartment no.) 10 Crop insurance proceeds 1300 HILL STREET 9 Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale..... D I 11 City or town, province or state, and ZIP or foreign postal code WALNUT CREEK CA 94132 Account number FATCA 2nd TIN not. filing red 13 Excess golden parachute payments 14 Gross proceeds paid to an attorney $ s OMB No. 1545-0110 U VOILU CORRECTEL PAYER'S name, street address, city or town, state or province, country, ZIP 1a Total ordinary dividends or foreign postal code, and telephone no. Sinclair Corp, 8,895 28282 Ford Road Detroit Michigin 30030 1b Qualified dividends 2019 Dividends and Distributions 4,322 2a Total capital gain distr. Form 1099-DIV 2b Unrecap. Sec. 1250 gain Copy 2 PAYER'S TIN RECIPIENT'S TIN 2c Section 1202 gain 2d Collectibles (28%) gain To be filed with recipient's state income tax return, when required. 33333333333 RECIPIENT'S name 3 Nondividend distributions | 4 Federal income tax withheld Kyle Peterson 5 Section 199A dividends 6 Investment expenses Street address (including apt. no.) 1300 Hill Street 7 Foreign tax paid 8 Foreign country or U.S. possession City or town, state or province, country, and ZIP or foreign postal code $ 9 Cash liquidation distributions 10 Noncash liquidation distribution Walnut Creek, Ca. 94132 FATCA filing 11 Exempt-interest dividends | 12 Specified private activity requirement bond interest dividends Account number (see instructions) 13 State | 14 State identification no. 15 State tax withheld Form 1099-DIV www.irs.gov/Form1099DIV Department of the Treasury - Internal Revenue Service