! Required information [The following information applies to the questions displayed below.] 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 Option 1 $ 60,000 No coverage 0 Health insurance Restricted stock NQO's Option 2 Option 3 $ 50,000 $45,000 $ 5,000 $5,000 0 1,000 shares Option 4 $ 45,000 $ 5,000 0 100 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 allows 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 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 2020 tax rules regardless of year on tax form.) (Input all the values as positive numbers. Use 2020 tax rules regardless of year on tax form.) Schedule Form 8949 PG1 SCHEDULED OMB No. 1545-0074 Capital Gains and Losses Attach to Form 1040 1040-SR, or 1040-NR. Go to www.irs.gov/Scheduled for instructions and the latest information. Use Form 3949 to list your transactions for lines 16,2. 3.86, 9, and 10. (Form 1040 or 1040-SR) Department of the Treasury Intemal Revenue Service (09) Name(s) shown on return Pratt 2019 Attachment Sequence No. 12 Your social security number Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. Part 1 Short-Term Capital Gains and LossesGenerally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis) (9) Adjustments to gain or loss from Form(s) 8949, Part I, line 2. column (9) (h) Gain or loss) Subtract column (e) from column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars. 1a Totals for all short-term transactions reported on Form 1099-8 for which 5 8 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 15 16 Totals for all transactions reported on Form(s) 8949 with Box A checked 2 Totals for all transactions reported on Form(s) 8949 with Box B checked 3 Totals for all transactions reported on Form(s) 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 8 in column (h). If you have any long-term capital gains or losses, go to Part I below. Otherwise, go to Part Ill 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. (9) Adjustments to (d) Proceeds (sales (e) Cost (or other gain or loss from price) basis) Form(s) 8949, Part This form may be easier to complete if you round off cents to whole dollars. II line 2 column (9) 8a Totals for all long-term transactions reported on Form 1099-5 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 Form(s) 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 Form(s) 8949 with Box F checked 11 Gain from Form 4797, Part I: long-term gain from Forms 2439 and 6252: and long-term gain or loss) from Forms 4684.6781, and 8824 12 Net long-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 13 Capital gain distributions. See the instructions 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 Ill on the back For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11338H (h) Gain or loss) Subtract column (e) from column (d) and combine the result with column (9) 11 12 13 14 15 Schedule D (Form 1040 or 1040-SR) 2019 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2020 McGraw-Hill Education. Required information Schedule PG1 Form 8949 OMB No. 1545-0074 Department of the Treasury - Internal Revenue Sales and Other Dispositions of Capital Assets Go to www.irs.gov/ Form8949 for instructions and the latest information. 2019 File with your Schedule D to list your transactions for lines 16.2.3. 85, 9, and 10 of Schedule D. Social security number or taxpayer identification number Service Attachment Sequence No. 124 Name(s) shown on return Pratt Before you check Box A, B, or 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 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 Parti 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 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 3940 (see instructions). Note: 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) 1099-8 showing basis was reported to the IRS (see Note above) 6) Short-term transactions reported on Form(s) 1099-8 showing basis wasn't reported to the IRS (C) Short-term transactions not reported to you on Form 1099-8 1 (a) Description of property (Example: 100 sh.XYZ Co.) (b) Date acquired (Mo.. day. yr.) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions Adjustment, if any, to gain or loss. If you enter an amount in column (g). enter a code in column (1). See the separate instructions. (1) Code(s) from (g) Amount of instructions adjustment (h) Gain or loss). Subtract column (e) from column (d) and combine the result with column (9) 0 2 Totals. Add the amounts in columns (d), (e), (g) and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 16 (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 (9) to correct the basis. See Column (g) 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 (2019) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX ! Required information [The following information applies to the questions displayed below.] 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 Option 1 $ 60,000 No coverage 0 Health insurance Restricted stock NQO's Option 2 Option 3 $ 50,000 $45,000 $ 5,000 $5,000 0 1,000 shares Option 4 $ 45,000 $ 5,000 0 100 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 allows 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 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 2020 tax rules regardless of year on tax form.) (Input all the values as positive numbers. Use 2020 tax rules regardless of year on tax form.) Schedule Form 8949 PG1 SCHEDULED OMB No. 1545-0074 Capital Gains and Losses Attach to Form 1040 1040-SR, or 1040-NR. Go to www.irs.gov/Scheduled for instructions and the latest information. Use Form 3949 to list your transactions for lines 16,2. 3.86, 9, and 10. (Form 1040 or 1040-SR) Department of the Treasury Intemal Revenue Service (09) Name(s) shown on return Pratt 2019 Attachment Sequence No. 12 Your social security number Did you dispose of any investment(s) in a qualified opportunity fund during the tax year? Yes No If "Yes," attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. Part 1 Short-Term Capital Gains and LossesGenerally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the lines below. (d) Proceeds (sales price) (e) Cost (or other basis) (9) Adjustments to gain or loss from Form(s) 8949, Part I, line 2. column (9) (h) Gain or loss) Subtract column (e) from column (d) and combine the result with column (9) This form may be easier to complete if you round off cents to whole dollars. 1a Totals for all short-term transactions reported on Form 1099-8 for which 5 8 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 15 16 Totals for all transactions reported on Form(s) 8949 with Box A checked 2 Totals for all transactions reported on Form(s) 8949 with Box B checked 3 Totals for all transactions reported on Form(s) 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 8 in column (h). If you have any long-term capital gains or losses, go to Part I below. Otherwise, go to Part Ill 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. (9) Adjustments to (d) Proceeds (sales (e) Cost (or other gain or loss from price) basis) Form(s) 8949, Part This form may be easier to complete if you round off cents to whole dollars. II line 2 column (9) 8a Totals for all long-term transactions reported on Form 1099-5 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 Form(s) 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 Form(s) 8949 with Box F checked 11 Gain from Form 4797, Part I: long-term gain from Forms 2439 and 6252: and long-term gain or loss) from Forms 4684.6781, and 8824 12 Net long-term gain or loss) from partnerships. S corporations, estates, and trusts from Schedule(s) K-1 13 Capital gain distributions. See the instructions 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 Ill on the back For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11338H (h) Gain or loss) Subtract column (e) from column (d) and combine the result with column (9) 11 12 13 14 15 Schedule D (Form 1040 or 1040-SR) 2019 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2020 McGraw-Hill Education. Required information Schedule PG1 Form 8949 OMB No. 1545-0074 Department of the Treasury - Internal Revenue Sales and Other Dispositions of Capital Assets Go to www.irs.gov/ Form8949 for instructions and the latest information. 2019 File with your Schedule D to list your transactions for lines 16.2.3. 85, 9, and 10 of Schedule D. Social security number or taxpayer identification number Service Attachment Sequence No. 124 Name(s) shown on return Pratt Before you check Box A, B, or 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 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 Parti 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 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 3940 (see instructions). Note: 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) 1099-8 showing basis was reported to the IRS (see Note above) 6) Short-term transactions reported on Form(s) 1099-8 showing basis wasn't reported to the IRS (C) Short-term transactions not reported to you on Form 1099-8 1 (a) Description of property (Example: 100 sh.XYZ Co.) (b) Date acquired (Mo.. day. yr.) Date sold or disposed of (Mo., day, yr.) (d) Proceeds (sales price) (see instructions) (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions Adjustment, if any, to gain or loss. If you enter an amount in column (g). enter a code in column (1). See the separate instructions. (1) Code(s) from (g) Amount of instructions adjustment (h) Gain or loss). Subtract column (e) from column (d) and combine the result with column (9) 0 2 Totals. Add the amounts in columns (d), (e), (g) and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 16 (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 (9) to correct the basis. See Column (g) 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 (2019) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX
