Required information Comprehensive Problem 07-63 (LO 07-1, LO 07-2, LO 07-3, LO 07-4) (Algo) [The following information applies to the questions displayed below] During 2021, your clients, Mr. and Mrs. Howell, owned the following investment assets: Investment Assets 300 shares of IBM common 200 shares of IBM common 2,100 shares of Cisco common 3,000 shares of Apple preferred 420 shares of Vanguard mutual fund Date Acquired 11/22/2018 4/3/2019 12/12/2019 8/14/2020 3/2/2021 Purchase Price $10,360 "No commissions are charged when no-load mutual funds are bought and sold. 43,260 140,000 52,500 14,800 Broker's Commission Paid at Time of Purchase $100 300 1,300 550 No-load fund Because of the downturn in the stock market, Mr. and Mrs. Howell decided to sell most of their stocks and the mutual fund in 2021 and to reinvest in municipal bonds. The following investment assets were sold in 2021 Broker's Commission Paid at Investment Assets 300 shares of IBM common Date Sold 5/6 Sale Price Time of Sale $13,800 $100 3,000 shares of Apple preferred 10/5 221,500 2,100 shares of Cisco common 8/15 63,260 2,000. 650 451 shares of Vanguard mutual fund 12/21 15,800 No-load fund "No commissions are charged when no-load mutual funds are bought and sold The Mountain in them Em 1000 Dhaun the sla nende nos of the cominciane aid Entourmalin *No commissions are charged when no-load mutual funds are bought and sold. The Howells' broker issued them a Form 1099-B showing the sales proceeds net of the commissions paid. For example, the IBM sales proceeds were reported as $13,700 on the Form 1099-B they received. In addition to the sales reflected in the table above, the Howells provided you with the following additional information concerning 2021: . . The Howells received a Form 1099-B from the Vanguard mutual fund reporting a $900 long-term capital gain distribution. This distribution was reinvested in 31 additional Vanguard mutual fund shares on 6/30/2021 In 2014, Mrs. Howell loaned $6,100 to a friend who was starting a new multilevel marketing company called LD3. The friend declared bankruptcy in 2021, and Mrs. Howell has been notified she will not be receiving any repayment of the loan. The Howells have a $2,400 short-term capital loss carryover and a $4,900 long-term capital loss carryover from prior years. The Howells did not instruct their broker to sell any particular lot of IBM stock. The Howells earned $3,050 in municipal bond interest, $3,050 in interest from corporate bonds, and $4,100 in qualified dividends. Assume the Howells have $132,500 of wage income during the year. Comprehensive Problem 07-63 Part a (Algo) a. Use Form 8949 and page 1 of Schedule D to compute net long-term and short-term capital gains. Then, compute the Howells' tax liability for the year (ignoring the alternative minimum tax and any phase-out provisions) assuming they file a joint return, they have no dependents, they don't make any special tax elections, and their itemized deductions total $26,000. Assume that asset bases are reported to the IRS. (Use the tax rate schedules. Dividends and Capital Gains Tax Rates) Mr. Howell social security number 412-34-5670 (Input all values as positive numbers unless instructed otherwise on the forms. Negative amounts should be indicated by a minus sign. Use 2021 tax rules regardless of year on tax form.) Complete this question by entering your answers in the tabs below. Form 8949 Form 8949 PG1 PG2 Form 8949 Page 1 and 2. Form 8949 (2020) Schedule D Attachment Sequence No. 12A Page 2 Names) shown on retum Name and 55N or taxpayer identification no not required if shown on other side Social security number or taxpayer identification number Mr. and Mrs 412-34-5670 Form 8949 (2020) 2 Name(s) shown on retum Name and SSN or taxpayer identification no. not required & shown on other side. 2 Mr. and Mrs. Howell Attachment Sequence No. 12A Page 2 Social security number or taxpayer identification number 412-34-5670 Before you check Box D, E, or F below, see whether you received any Form 1099-8 or substeute statement(s) from your broker A substitute statement will have the same information as Form 1099-8 Ether will show whether your basis (ususly 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 generally long-term (see instructions) For short termi transactions, see page 1 Note: You may aggregate al long-term transactions reported on Form(s) 1099-B showing basis was reported to the SRS and for which no adjustments or codes are required Enter the totals directly on Schedule D. line Sa; you aren't required to report these transactions on Form 8949 (see instructions), You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page 2, for each applicable box. If you have more long-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 O(D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) 1 (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS (F) Long-term transactions not reported to you on Form 1099-8 Adjustment, if any, to gain or loss If (a) Description of property (Example: 100 sh XYZ Co.) (b) Date acquired (mm/dd/yyyy) (c) Date sold or disposed of (mm/dd/yyyy) (d) Proceeds (e) Cost or other basis. See the Note below and (sales price) (see see Column (e) in instructions) the separate instructions Adjustment, if any, to gain or loss. If you enter an amount in column (g). enter a code in column (f). See the separate instructions (f) Code(s) from instructions (g) Amount of adjustments (h) Gain or (loss) Subtract column (e) from column (d) and combine the result with column (g) Proy of 2 # Next > 2 Total Ade the amounts in columns (d), (e), (g), and (h) (abtract negative amounts) Enter each total hem and include on your Schedule D, Ine b (if Box D above is checked), ine 9 ( Box E above is checked), or lee 10 Bex Fabove n checked) Note If you checked Box D above but the basis reported to the IRS was incorect, enter in column (e) the basis as reported to the IRS and enter and adjustment in column ig) to correct the basis See Column (g) in the separate instructions for how to figure the amount of the adjustment THIS FORM IS A SIMULATION OF AN OFFICIAL US. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 2021 McGraw Hill Education. Form 8949 (2020) ces Howells' tax liability for the year 201,000